Question
I have solved for the 1 year interest rate in excel by finding the bond price at $1000, equaling 973.52. I know to solve for
I have solved for the 1 year interest rate in excel by finding the bond price at $1000, equaling 973.52. I know to solve for the 1-year rate by doing 1000/973.52-1 to equal 2.72%
I cannot find the 2, 3, and 4 year interest rates in excel though.
The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity.
Years to Maturity Price, (% of face value)
1 year; 97.352%
2 year; 93.851
3 year; 90.044
4 year; 85.980
solve for the following using excel :
a.What is the 1-year interest rate?
b. What is the 2-year interest rate?
c. What is the 3-year interest rate?
d.What is the 4-year interest rate?
e.Is the yield curve upward-sloping, downward-sloping, or flat?
- Upward-sloping-correct
- Downward-sloping
- Flat
f.Is this the usual shape of the yield curve?
- Yes-correct
- No
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