Question
We have been given the following data: i) Intrest Rate on 1 yr bond = Four Percent ii)Intrest Rate on 2 yr bond = Five
We have been given the following data:
i) Intrest Rate on 1 yr bond = Four Percent
ii)Intrest Rate on 2 yr bond = Five Percent
iii)Intrest Rate on 3 yr bond = Six Percent
a] Caluclate the intrest rate on a 1 yr bond, 1 year from now
b] Calculate the intrest rate on a 1 yr bond, 2 years from now
c] Draw yield graph and describe
The intrest on a 1 yr today bond falls to two percent, declines to four percent one yr from now, finally declines to 4.5 percent 2 yr years from now.
d] Find the intrest rate on a 2 yr bond now, and a 3 yr bond now.
e] Sketch and describe yield graph
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