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Posted on Sep 06, 2024

use interest rate table to answer individuals who qualify (the guarantee is primarily reserved for people who have served in the military). A federal guarantee

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individuals who qualify (the guarantee is primarily reserved for people who have served in the military). A federal guarantee acts as a subsidy to the borrower since a lending institution assigns a lower risk-premium to the borrower, and thus, is willing to lend at a lower rate because the loan is secure from default risk. Suppose lending institutions are willing to make a 30-year, $100,000 loan that is not federally guaranteed for an 8 percent interest rate; suppose that with a federal guarantee, lending institutions would make the same loan for 6 percent. (a) What is the present value of the government guarantee to the borrower? Show your calculations and explain how you obtain your answer. (b) If the government imposed a 5-percent maximum rate that could be charged by lending institutions to government- guaranteed borrowers in order to "protect" such borrowers, how much of a lump-sum fee would a guaranteed borrower have to initially pay the lending institution to induce the lender to make the loan? (That is, assume that a lending institution will only make such a loan if it receives an effective 6-percent interest rate.) U.S. DEPARTMENT OF THE TREASURY Resource Center Daily Treasury Yield Curve Rates Get updates to this content XML These data are also available in XML format by clicking on the XML icon. The schema for the XML is available in XSD format by clicking on the XSD icon. If you are having trouble viewing the above XML in your browser, click here To access interest rate data in the legacy XML format and the corresponding XSD schema, click here. Select type of Interest Rate Data Daily Treasury Yield Curve Rates Select Time Period Current Month Go Go 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 7 Yr 10 Yr 20 YI 30 Yr Date 08/03/20 1 Mo 0.09 2 Mo 0.09 5 Yr 0.22 0.10 0.11 0.12 0.11 0.13 0.40 0.56 1.01 1.23 08/04/20 0.09 0.09 0.09 0.11 0.14 0.11 0.10 0.19 0.36 0.52 0.96 1.19 08/05/20 0.08 0.09 0.10 0.12 0.12 0.11 0.13 0.22 0.39 0.55 1.00 1.22 0.07 0.11 0.10 0.11 0.14 0.11 0.13 0.21 0.39 0.55 0.98 120 08/06/20 08/07/20 08/10/20 0.08 0.09 0.10 0.12 0.14 0.13 0.14 0.23 0.41 0.57 1.01 1.23 0.09 0.11 0.11 0.13 0.13 0.14 0.15 0.24 0.42 0.59 1.04 1.25 08/11/20 0.08 0.10 0.11 0.12 0.15 0.16 0.18 0.27 0.46 0.64 1.10 1.32 08/12/20 0.08 0.10 0.11 0.12 0.13 0.16 0.19 0.30 0.50 0.69 1.15 1.37 08/13/20 0.08 0.10 0.10 0.12 0.14 0.16 0.19 0.32 0.52 0.71 1.20 1.42 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.51 0.71 1.21 1.45 08/14/20 08/17/20 0.12 0.12 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.49 0.69 1.19 0.08 0.09 0.09 0.13 0.13 0.14 0.17 0.27 0.47 0.67 1.16 1.40 08/18/20 08/19/20 0.07 0.09 0.11 0.12 0.13 0.14 0.17 0.29 0.48 0.68 1.20 1.42 08/20/20 0.08 0.09 0.11 0.13 0.12 0.13 0.15 0.26 0.46 0.65 1.15 1.38 08/21/20 0.07 0.09 0.10 0.12 0.13 0.16 0.16 0.27 0.46 0.64 1.13 1.35 08/24/20 0.09 0.10 0.12 0.12 0.14 0.14 0.18 0.28 0.47 0.65 1.14 1.35 08/25/20 0.08 0.10 0.11 0.12 0.13 0.15 0.18 0.30 0.49 0.69 1.18 1.39 08/26/20 0.08 0.10 0.11 0.12 0.12 0.16 0.18 0.28 0.50 0.69 1.20 08/27/20 0.09 0.10 0.11 0.11 0.13 0.16 0.19 0.53 0.74 1.28 1.50 08/28/20 0.09 0.09 0.10 0.11 0.12 0.14 0.16 0.28 0.51 0.74 1.29 1.52 U.S. DEPARTMENT OF THE TREASURY Resource Center Daily Treasury Yield Curve Rates Get updates to this content XML These data are also available in XML format by clicking on the XML icon. The schema for the XML is available in XSD format by clicking on the XSD icon. If you are having trouble viewing the above XML in your browser, click here To access interest rate data in the legacy XML format and the corresponding XSD schema, click here. Select type of Interest Rate Data Daily Treasury Yield Curve Rates Select Time Period Current Month Go Go 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 7 Yr 10 Yr 20 YI 30 Yr Date 08/03/20 1 Mo 0.09 2 Mo 0.09 5 Yr 0.22 0.10 0.11 0.12 0.11 0.13 0.40 0.56 1.01 1.23 08/04/20 0.09 0.09 0.09 0.11 0.14 0.11 0.10 0.19 0.36 0.52 0.96 1.19 08/05/20 0.08 0.09 0.10 0.12 0.12 0.11 0.13 0.22 0.39 0.55 1.00 1.22 0.07 0.11 0.10 0.11 0.14 0.11 0.13 0.21 0.39 0.55 0.98 120 08/06/20 08/07/20 08/10/20 0.08 0.09 0.10 0.12 0.14 0.13 0.14 0.23 0.41 0.57 1.01 1.23 0.09 0.11 0.11 0.13 0.13 0.14 0.15 0.24 0.42 0.59 1.04 1.25 08/11/20 0.08 0.10 0.11 0.12 0.15 0.16 0.18 0.27 0.46 0.64 1.10 1.32 08/12/20 0.08 0.10 0.11 0.12 0.13 0.16 0.19 0.30 0.50 0.69 1.15 1.37 08/13/20 0.08 0.10 0.10 0.12 0.14 0.16 0.19 0.32 0.52 0.71 1.20 1.42 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.51 0.71 1.21 1.45 08/14/20 08/17/20 0.12 0.12 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.49 0.69 1.19 0.08 0.09 0.09 0.13 0.13 0.14 0.17 0.27 0.47 0.67 1.16 1.40 08/18/20 08/19/20 0.07 0.09 0.11 0.12 0.13 0.14 0.17 0.29 0.48 0.68 1.20 1.42 08/20/20 0.08 0.09 0.11 0.13 0.12 0.13 0.15 0.26 0.46 0.65 1.15 1.38 08/21/20 0.07 0.09 0.10 0.12 0.13 0.16 0.16 0.27 0.46 0.64 1.13 1.35 08/24/20 0.09 0.10 0.12 0.12 0.14 0.14 0.18 0.28 0.47 0.65 1.14 1.35 08/25/20 0.08 0.10 0.11 0.12 0.13 0.15 0.18 0.30 0.49 0.69 1.18 1.39 08/26/20 0.08 0.10 0.11 0.12 0.12 0.16 0.18 0.28 0.50 0.69 1.20 08/27/20 0.09 0.10 0.11 0.11 0.13 0.16 0.19 0.53 0.74 1.28 1.50 08/28/20 0.09 0.09 0.10 0.11 0.12 0.14 0.16 0.28 0.51 0.74 1.29 1.52