okewori
Jul 23, 2009, 01:35 PM
1. Treasury bond that matures in 10 years has yield of 6%. A 10 year corporate bond has a yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the DRP on the corporate bond?
2.Interest rates on 4-year Treasury securities are currently7%, while 6-year Treasury securities yield 7.5%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now?
3.The real risk-free rate is 3%. Inflation is expected to be 3% this year, 4% next year, and then3.5% thereafter. The maturity risk premium is estimated to be 0.05 X (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note?
2.Interest rates on 4-year Treasury securities are currently7%, while 6-year Treasury securities yield 7.5%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now?
3.The real risk-free rate is 3%. Inflation is expected to be 3% this year, 4% next year, and then3.5% thereafter. The maturity risk premium is estimated to be 0.05 X (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note?