Question
The following table shows the prices of a sample of Treasury bonds, all of which have coupon rates of zero. Each bond makes a single
The following table shows the prices of a sample of Treasury bonds, all of which have coupon rates of zero. Each bond makes a single payment at maturity.
Years to Maturity | Price (% of face value) |
---|---|
1 | 98.852% |
2 | 95.351 |
3 | 91.544 |
4 | 87.480 |
A)What is the 1-year interest rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
B)What is the 2-year interest rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
C)What is the 3-year interest rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
D)What is the 4-year interest rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
E)Is the yield curve upward-sloping, downward-sloping, or flat?
F) Is this the usual shape of the yield curve?
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