Question
6.) One-year Treasury bills currently earn 6.90% and you expect that one year from now, 1-year Treasury bill rates will increase to 8.07% and that
6.) One-year Treasury bills currently earn 6.90% and you expect that one year from now, 1-year Treasury bill rates will increase to 8.07% and that two years from now, one-year Treasury bill rates will increase to 9.48%; If the unbiased expectations theory is correct, what should the current rate be on a three-year Treasury security?
7.) A 5.85% coupon bond with 26 years left to maturity can be called in 21 years; The call premium is 1 year of coupon payments; The bond is currently offered for sale at $998.57 (Assume interest payments are semiannual) - What is the bond's yield to maturity?
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