Question
USE 5 DECIMAL PLACES. SHOW WORK. Today, interest rates on 1-year T-bonds yield 1.6%, interest rates on 2-year T-bonds yield 2.6%, and interest rates on
USE 5 DECIMAL PLACES.
SHOW WORK.
Today, interest rates on 1-year T-bonds yield 1.6%, interest rates on 2-year T-bonds yield 2.6%, and interest rates on 3-year T-bonds yield 3.5%. a. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations. %
b. If the pure expectations theory is correct, what is the yield on 2-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations. %
c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations. %
USE 5 DECIMAL PLACES.
SHOW WORK.
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Personal Finance
Authors: E. Thomas Garman, Raymond E. Forgue, Jonathan Fox
14th Edition
0357901495, 9780357901496
