Question
Current spot rates are given in the table below. Based on pure expectation theory, what price should a 12-month bank bill with face value of
Current spot rates are given in the table below. Based on pure expectation theory, what price should a 12-month bank bill with face value of $10,000 be sold for in 2 years time?
| Term (year) | Interest rate (% p.a.) |
| 1 | 5.0 |
| 2 | 6.0 |
| 3 | 6.8 |
| 4 | 7.4 |
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International Financial Reporting A Practical Guide
Authors: Alan Melville
6th edition
1292200743, 1292200766, 9781292200767, 978-1292200743
