Question

Interest rates on 4-year Treasury securities are currently 6.9%, while 6-year Treasury securities yield 7.8%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places.

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Answer #1

(1+yield on n-year security)^{n}*(1+yield on r-year
security after n-years)^{r} = (1+yield on r+n
year-security)^{r+n}

n-year security is the 4-year Treasury security and r-year security is the 2-year security.

(1+0.069)^{4}*(1+yield on r-year security after
n-years)^{2} = (1+0.078)^{2+4}

1.069^{4}*(1+yield on r-year security after
n-years)^{2} = 1.078^{6}

(1+yield on r-year security after n-years)^{2} =
1.078^{6}/1.069^{4} =
1.569323814085808704/1.305902703121 =
1.2017157253256723684379981281186

(1+yield on r-year security after n-years) =
1.2017157253256723684379981281186^{1/2} =
1.2017157253256723684379981281186^{0.5} = 1.0962

yield on 2-year security after 4-years = 1.0962- 1 = 0.962 or 9.62%

the market believes that 2-year securities will be 9.62% yielding 4 years from now.

Interest rates on 4-year Treasury securities are currently 6.4%,
while 6-year Treasury securities yield 7.4%. The data has been
collected in the Microsoft Excel Online file below. Open the
spreadsheet and perform the required analysis to answer the
question below.
Expectations Theory
4-yr.
Treasury security yield
6.40%
6-yr.
Treasury security yield
7.40%
Algebraic solution:
Total
return earned on 6-year securities
Total
return earned on 4-year securities
Yield on
2-yr. securities, 4 years from now
Geometric solution:
1 +
Total return...

EXPECTATIONS THEORY Interest rates on 4-year Treasury securities
are currently 6.2%, while 6-year Treasury securities yield 7.65%.
If the pure expectations theory is correct, what does the market
believe that 2-year securities will be yielding 4 years from now?
Calculate the yield using a geometric average. Do not round your
intermediate calculations. Round your answer to two decimal places.
%

1. Interest rates on 4-year Treasury securities are currently
5.7%, while 6-year Treasury securities yield 7.3%. If the pure
expectations theory is correct, what does the market believe that
2-year securities will be yielding 4 years from now? Calculate the
yield using a geometric average. Do not round your intermediate
calculations. Round your answer to two decimal places.

Problem 6-8
Expectations Theory
Interest rates on 4-year Treasury securities are currently
6.15%, while 6-year Treasury securities yield 7.85%. If the pure
expectations theory is correct, what does the market believe that
2-year securities will be yielding 4 years from now? Round your
answer to two decimal places.

How would I put this in a financial calculator?
EXPECTATIONS THEORY
Interest rates on 4-year Treasury securities are currently 6.8%,
while 6-year Treasury securities yield 7.95%. If the pure
expectations theory is correct, what does the market believe that
2-year securities will be yielding 4 years from now? Calculate the
yield using a geometric average. Do not round your intermediate
calculations. Round your answer to two decimal places.
EXPECTATIONS THEORY
One-year Treasury securities yield 2.3%. The market anticipates
that 1...

Interest rates on 3 year treasury securities are currently 5%,
while 5 year treasury securities yield 8%. If the pure expectations
theory is correct what does the market believe that 2 year
securities will be yielding 3 years from now? Answer to
the nearest hundredth of a percent as in xx.xx% and enter without
the percent sign.

Interest rates on 3-year Treasury securities are currently
1.92%, while 10-year Treasury securities yield 5.62%. If the pure
expectations theory is correct, what does the market believe that
7-year Treasury securities will be yielding 3 years from now? a.
4.03 percent b. 3.70 percent c. 7.21 percent d. 6.04 percent e.
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A 5-year Treasury bond has a 4.9% yield. A 10-year Treasury bond
yields 6.45%, and a 10-year corporate bond yields 8.2%. The market
expects that inflation will average 1.65% over the next 10 years
(IP10 = 1.65%). Assume that there is no maturity risk
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PURE EXPECTATIONS THEORY The yield on 1-year Treasury securities
is 6%, 2-year securities yield 6 2%, 3-year securities yield 6 3%,
and 4-year securities yield 6 5%. There is no maturity risk
premium. Using expectations theory and geometric averages, forecast
the yields on the following securities: a. A 1-year security, 1
year from now b. A 1-year security, 2 years from now c. A 2-year
security, 1 year from now d. A 3-year security, 1 year from now

A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond
yields 6.1%, and a 10-year corporate bond yields 8.45%. The market
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