Saturday
April 19, 2014

Homework Help: finance

Posted by Johniece on Monday, April 23, 2012 at 2:48pm.

12. A Treasury note with a maturity of four years carries a nominal
rate of interest of 10 percent. In contrast, an eight-year Treasury
bond has a yield of 8 percent.
a. If inflation is expected to average 7 percent over the first four
years, what is the expected real rate of interest?
b. If the inflation rate is expected to be 5 percent for the first
year, calculate the average annual rate of inflation for years
2 through 4.
c. If the maturity risk premium is expected to be zero between
the two Treasury securities, what will be the average annual
inflation rate expected over years 5 through 8?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

finance - 12. A Treasury note with a maturity of four years carries a nominal ...
finance - A treasury note with a maturity of four years carries a nominal rate ...
Finance - A Treasury note with a maturity of four years carries a nominal rate ...
Finance - A Treasury note with a maturity of four years carries a nominal rate ...
Managerial Finance - The real risk-free rate is 2.1%. Inflation is expected to ...
Finance - P5. A thirty U.S. Treasury bond has a 4.0 percent interest rate. In ...
Finance - Judy Johnson is choosing between investing in two Treasury securities ...
Finance - A thirty-year Treasury bond has a 4.0 percent interest rate. In ...
Finance - 4.A thirty year US treasury bond has a 4.0 percent interest rate.In ...
Principles of Finance - .A thirty year US treasury bond has a 4.0 percent ...

Search
Members