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What are the five key features of bonds? Explain. Show your work. If the pure expectations theory holds, what does the market expect will be
What are the five key features of bonds? Explain. Show your work. If the pure expectations theory holds, what does the market expect will be the interest rate on one-year securities, four years from now (1 year maturity yield is 6.0% 2 year maturity yield is 6.1%; 3 year maturity yield is 6.2%; 4 year maturity yield is 6.3 % 5 year maturity yield is 6.3%)? (Hints: Draw the time line and then calculate the interest rate.) 1. 2. What are the five key features of bonds? Explain. Show your work. If the pure expectations theory holds, what does the market expect will be the interest rate on one-year securities, four years from now (1 year maturity yield is 6.0% 2 year maturity yield is 6.1%; 3 year maturity yield is 6.2%; 4 year maturity yield is 6.3 % 5 year maturity yield is 6.3%)? (Hints: Draw the time line and then calculate the interest rate.) 1. 2
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