1.Suppose the current one-year Treasury Bill rate is 6%, the current three-year

Question

1.Suppose the current one-year Treasury Bill rate is 6%, the current three-year Treasury Bond rate is 6.1%, and the current five-year Treasury Bond rate is 6.2%. According to the expectations theory of interest rates, what would you expect the four-year Treasury rate to be one year from now?

2.A bond has a current yield of 8%, a coupon rate of 7%, a face value of $1,000 and matures in 10 years. What is its Yield to Maturity?

3. A bond has a Yield to Call of 9% and a coupon rate of 11%. The bond has a face value of $1,000 and matures in 12 years. However, it can be called in 4 years for $1,050. How much is the bond worth?

Explanation / Answer

1) 6.751 %

2) 8.94 %

3) 1100.21

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.