# 7. Forecasting interest rates Assume the current interest rate on a one-year Treasury bond (1R1) is 5.50 percent, the current rate on a two-year Treasury bond (1R2) is 5.95 percent, and the current rate on a three-year Treasury bond (1R3)

56,271 results
1. ## Math

The Garraty company has two bond issues outstanding. Both bonds pa \$100 annual interest plus \$1,000 at maturity. Bond L has a maturity of 15 years and Bond S a maturity of 1 year. A). What will be the value of each of these bonds when the going rate of

2. ## College Finance

1.A recent edition of The Wall Street Journal reported interest rates of 10.75 percent, 11.10 percent, 11.48 percent, and 11.75 percent for 3-, 4-, 5-, and 6-year Treasury security yields, respectively. According to the unbiased expectation theory of the

3. ## FINANCE

8. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 5 percent, E(2r1) = 6 percent, E(3r1) = 7.5 percent E(4r1) = 6.85

4. ## FINANCE

3. Unbiased Expectations Theory One-year Treasury bills currently earn 5.50 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.75 percent. If the unbiased expectations theory is correct, what should the current rate

5. ## Finance

A 12-year bond has an annual coupon rate of 9%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT? (Points: 4) The bond is currently selling at a price below its

6. ## finance

1. Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of \$1,000. The market interest rate (r) is 6%, based on semiannual compounding. What is the bond’s price? 2. A 20-year, \$1,000 par value bond has a 9% annual

7. ## finance

A thirty year US Treasury bond has a 4.0% interest rate.In contrast a ten year treasury bond has an interest rate of 3.7%. If inflation is expected to average 1.5% points over both the next ten years and thirty years, determine the maturity risk premium

8. ## Finance

Suppose the September CBOT Treasury bond futures contract has a quoted price of 89-09. What is the implied annual interest rate inherent in this futures contract? Assume this contract is based on a 20 year Treasury bond with semi-annual interest payments.

9. ## Math

A 10-year bond with a 5% coupon and a 1million VND par value is currently priced at 821,000VND. a. If the current market interest rate is 8%. Should you buy the bond? Why or why not? b. Assuming you buy and hold this bond for 6 years. What price must you

10. ## Finance

Given her evaluation of current economic conditions, Ima Nutt believes there is a 20 percent probability of recession, a 50 percent chance of continued steady growth, and a 30 percent probability of inflationary growth. For each possibility, Ima has

11. ## Finance

Judy Johnson is choosing between investing in two Treasury securities that mature in five years and have par values of \$1,000. One is a Treasury note paying an annual coupon of 5.06 percent. The other is a TIPS which pays 3 percent interest annually. a. If

12. ## FINANCE

5. Forecasting Interest Rates Assume the current interest rate on a one-year Treasury bond (1R1) is 5.00 percent, the current rate on a two-year Treasury bond (1R2) is 5.75 percent, and the current rate on a three-year Treasury bond (1R3) is 6.25 percent.

13. ## Accounting

Go to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent: A. What is the bond price at 11%? B. What is the bond price at 8%? C. What would

14. ## Math

he current term-structure of spot interest rates for safe zero-coupon bonds is as follows: Maturity, in years Interest rate(r) 1 8% 2 10% 3 11% 4 12% 5 13% There is a safe bond B which has 4 years before maturity and pays a coupon of 12% at regular annual

15. ## Finance

Miller Corporation has a premium bond making semiannual payments. The bond pays an 8 percent coupon, has a YTM of 6 percent, and has 13 years to maturity. The Modigliani Company has a discount bond making semiannual payments. The bond pays a 6 percent

16. ## Need help by tonite Finance

3. Unbiased Expectations Theory One-year Treasury bills currently earn 5.50 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.75 percent. If the unbiased expectations theory is correct, what should the current rate

17. ## Finance

the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.30%, 1R2 = 0.90%, 1R3 = 1.30%, 1R4 = 1.45% Using the unbiased expectations theory, calculate the 1-year forward rates on zero coupon Treasury

18. ## bond valuation

Bond valuation The Garraty Company has two bond issues outstanding. Both bonds pay \$100 annual interest plus \$1,000 at maturity. Bondf L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will the value of each of these bonds when the

19. ## Finance

Interest rate premiums A 5-year Treasury bond has a 5.2 percent yield. A 10-year Treasury bond yields 6.4 percent, and a 10-year corporate bond yields 8.4 percent. The market expects that inflation will average 2.5 percent over the next 10 years (IP10 _

20. ## fin

1. A financial institution has the following market value balance sheet structure: (LG 19-1) Assets Liabilities and Equity . Cash \$ 1,000 Certificate of deposit \$ 10,000 Bond 10,000 Equity 1,000 Total assets \$11,000 Total liabilities and equity \$ 11,000.

21. ## finance

On March 11, 20XX, the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.40%, 1R2 = 1.00%, 1R3 = 1.40%, 1R4 = 1.55% Using the unbiased expectations theory, calculate the 1-year forward rates on

22. ## statistics

Investment analysts generally believe the interest rate on bonds is inversely related to the prime interest rate for loans; that is bonds perform well when lending rates are down and perform poorly when interest rates are up. Can the bond rate be predicted

23. ## Need help by tonite FINANCE

2. Interest rates A two-year Treasury security currently earns 5.25 percent. Over the next two years, the real interest rate is expected to be 3.00 percent per year and the inflation premium is expected to be 2.00 percent per year. What is the maturity

24. ## Math

Go to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent: A. What is the bond price at 11%? B. What is the bond price at 8%? C. What would

25. ## finance

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

26. ## math

Question 1 Find the interest. All rates are annual interest rates. Principal \$400 Rate 5% Time 1 year Incorrect answer A. \$10 Correct answer B. \$20 Incorrect answer C. \$40 Incorrect answer D. \$200Find the interest. All rates are annual interest rates.

Please can you help me to solve and get the solution for these problems. how to get the solution please help me question: 1.Find the price of a 10% coupon bond with 10 years to maturity if interest rates: A) increase by 1% B) decrease by 1% C) increase by

28. ## Finance

Which of the following statements is CORRECT? a. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is

29. ## FINANCE

7. Forecasting interest rates Assume the current interest rate on a one-year Treasury bond (1R1) is 5.50 percent, the current rate on a two-year Treasury bond (1R2) is 5.95 percent, and the current rate on a three-year Treasury bond (1R3) is 8.50 percent.

30. ## Finance

Answers for a 10 year us treasury bond has a 3.50 % interest rate, while a same maturity corporate bond has a 5.25 % interest rate. Real interest rates and inflation rate expectations would be for the two bonds. if default risk premium of 1.50 percentage

31. ## Finance

You purchased a \$1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that

32. ## Finance 200

The treasurer for Thornton Pipe and Steel Company wishes to use financial futures to hedge her interest rate exposure. She will sell five Treasury futures contracts at \$105,000 per contract. It is July and the contracts must be closed out in December of

33. ## Stats

Question 3 Investment analysts generally believe the interest rate on bonds is inversely related to the prime interest rate for loans; that is, bonds perform well when lending rates are down and perform poorly when interest rates are up. Can the bond rate

34. ## accounting

Assume Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate with annual payments, and a \$1,000 par value. a. Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be

35. ## economics

What is the inflation rate? If GDP deflator rises from 100 in year 1 to 107 in year 2 and 115 in year 3, what will be the inflation rate between year 1 and year 2 and between year 2 and year 3? Also, if the nominal interest rate is 9 % pa during all years,

36. ## Math

The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than

37. ## social studies

1)An interest rate is a special type of? a. loan b. price c. bank d. service 2) How does a compound interest rate differ from a simple interest rate? a. Compound interest rates pay more interest over time b. Compound interest rates are calculated only once

38. ## accounting

Heww Inc., issued a \$50,000, 10 year bond with a stated interest rate of 6%. Assume interest payments are made semi-annually. What is the selling price of the bond if the market rate of interest is 5%? (Round to the nearest dollar.)

39. ## Finance

midland chemcial is negotating a loan from manhattan bank and trust. the small chemical company needs to borrow 500,000. the bank offers a rate of 81/4 percent with a 20 percent compensating balance requirement, or as an alternative, 93/4 percent with

40. ## Finance (Coupon Bonds)

I am having a hard time starting on how to calculate this please. You purchased a \$1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the

41. ## Social Studies

I was wondering if I could check my answers with someone. I'm a bit confused with interest. I put stars next to the answers I chose. Thank you. An interest rate is a special type of (1 point) loan. **price. bank. service. 2. How does a compound interest

42. ## Social Studies

An interest rate is a special type of (1 point) loan. **price. bank. service. 2. How does a compound interest rate differ from a simple interest rate? (1 point) ***Compound interest rates pay more interest over time. Compound interest rates are calculated

43. ## finance

A treasury note with a maturity of four years carries a nominal rate of interest of 10%. In contrast, an eight year treasury bond has a yeild of 8%. A. If inflation is expected to average 7% over the first four years,what is the expected real rate of

value of outstanding bond changes whenever the going rate of interest changes in general short term interest rates are more volatile than long term interest rates. therefore short term bond prices are more sensitive to interest rate changes than are long

45. ## Finance

First Inc. is facing a liquidity problem and needs to issue a perpetual bond that is callable only at the end of year 2. The call price is \$1,000 (face value) plus an additional coupon payment. The current interest rate is 8% per year. At the end of each

46. ## Finance

Thr rate of return you would get if you bought a bond and held it to its maturity date is called the bond's yield to maturity. If interest rates in the economy rise after a bond has been issued, what will happen to the bond's price and to its YTM? Does the

47. ## Finance

"The value of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than

48. ## finance

The Wall Street Journal reports that the current rate on 8-year Treasury bonds is 5.85 percent, on 15-year Treasury bonds is 6.25 percent, and on a 15-year corporate bond issued by MHM Corp. is 7.35 percent. Assume that the maturity risk premium is zero.

49. ## Finance, Math

The one-year and two-year risk-free rates (yields) are 1% and 1.025%, respectively. Our model of the term structure says that one year from now the one-year interest rate will be one of the following two values: 0.01 or 0.01*u, where u is the up factor.

50. ## Finance

Dahler Corporation has just issued a bond with a maturity of 20 years, coupon rate of 10.25%, and a market price of \$1330.25. Dahler makes semiannual coupon payments. a) what is the YTM expressed as a quoted rate based on semi-annual compounding? And what

51. ## Econ

The 1-year interest rate on Swiss francs is 5 percent and the dollar interest rate is 8 percent. (A) if the current \$/SF spot rate is \$0.60, what would you expect the spot rate to be in 1 year. (B) Suppose US policy changes and leads to an expected future

52. ## Economics

Now lets consider a different type of government bond, a ten-year inflation indexed bond. Payments on this bond are adjusted for inflation based on the CPI. If inflation rises by five percent, interest payments on this bond will rise by five percent.

53. ## Finance Math

Tristan Sandino was given a 20-year bond when he was twelve years old and would like to sell it on his 21st birthday. The bond has a coupon rate of 4.8% and was purchased for \$580. Tristan receives interest checks every six months. If Tristan sells the

54. ## Math

Bond : Face Value = 100,000 State Rate = 9% Semi-annual Payments Term = 3years Market Rate of 12% Amortize the bond to determine: Year 1 Interest Expense End of Year 1 carrying value. My Answers: Year 1 Interest Expense = 5,621.05 End of Year 1 carrying

55. ## bond valuation

Bond valuation The Garraty Company has two bond issues outstanding. Both bonds pay \$100 annual interest plus \$1,000 at maturity. Bondf L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will the value of each of these bonds when the

56. ## Finance

A dealer in government securities currently holds \$875 million in 10-year Treasury bonds and \$1,410 million in 6-month Treasury bills. Current yields on the T-bonds average 7.15 percent while 6-month T-bill yields average 3.38 percent. The dealer is

57. ## Finance

4.A thirty year US treasury bond has a 4.0 percent interest rate.In contrast, a ten year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expect

58. ## Finance

A thirty-year Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expect

59. ## Finance

What is the value of 15-year corporate bonds, with a coupon rate of 9%, if current interest rates on similar bonds is 8%? How much would the value change if interest rates increased to 10%? Under what conditions will this bond trade at par (face value)?

60. ## finance

A small chemicalcompany is negotiatimg a loan from Manhatten Bank and Trust. The small chemical company needs to borrow \$500,000. The bank offers a rate of 8 1/4 % with a 20% compensating balance, or as an alternative 9 3/4% with additional fees of \$5,500

61. ## Principles of Finance

.A thirty year US treasury bond has a 4.0 percent interest rate.In contrast, a ten year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expect

6. (TCO F) Suppose the December CBOT Treasury bond futures contract has a quoted price of 80-07. What is the implied annual interest rate inherent in the futures contract? Assume this contract is based on a 20-year Treasury bond with semiannual interest

63. ## Finance

2. You are now considering adding a corporate bond to your investment portfolio. The bond was issued last year to have 10 years to maturity (so it has 9 years remaining to maturity from today) The bond has an 8% coupon, and was sold at par (\$1,000) when it

64. ## FINANCE

6. On May 23, 2014, the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security rates were as follows: 1R1 = 4.55 percent, 1R2 = 4.75 percent, 1R3 = 5.25 percent, 1R4 = 5.95 percent Using the unbiased

65. ## fanince

) A thirty-year U.S Treasury bond has a 4.0 percent interest rate. In Contrast, a ten-year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the Longer maturity bond. Investors expect

66. ## Social studies

How die a compound interest rate differ from a simple interest rate? Compound interest rates pay more interest over time Compound interest rates are calculated only once a year Compound interest rates ideally lower than simple interest rates•• Compound

67. ## Foundations of Financial Management

here is the problem The small chemical company needs to borrow \$500,000. The bank offers a rate of 8 1/4 percent with a 20 percent compensating balance requirement, or as an alternative, 9 3/4 percent with additional fees of \$5,500 to cover services the

68. ## college

I purchased a \$1,000 five percent coupon bond that matures in 10 years. How much would my bond be worth if interest rates fall to 4% the day after I purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that point?

69. ## accounting

You purchased a \$1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that

70. ## UWI

Digicel Jamaica has raised financing by issuing 25-year bonds on January 1, 2009. They mature on December 31, 2033 and have a par value of \$1,000 and a coupon rate of 8%. Coupon payments are made semi-annually. a)What is interest rate risk? Which bond has

71. ## FINANCE

2. Interest rates A two-year Treasury security currently earns 5.25 percent. Over the next two years, the real interest rate is expected to be 3.00 percent per year and the inflation premium is expected to be 2.00 percent per year. What is the maturity

72. ## Finance

The Carter Company's bond mature in 10 years have a par value of 1,000 and an annual coupon payment of \$80. The market interest rate for the bond is 9%. What is the price of these bonds The coupon rate on the bond, (interest/principal at maturity) = 8%

73. ## Statistics

Mortgage Rates In 2001, the mean contract interest rate for a conventional 30-year first loan for the purchase of a single-family home was 6.3 percent, according to the U.S. Federal Housing Board.A real estate agent believes that interest rates are lower

74. ## Finance

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

what is the expected real interest rate on a ten year 2.5% u s treasury bond

76. ## Finance

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

77. ## finance

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

78. ## finance

(Bond valuation) Eagle Ventures has a bond issue outstanding with an annual coupon rate of 7 percent and 4 years remaining until maturity. The par value of the bond is \$1,000. (a) Determine the current value of the bond if present market conditions justify

79. ## finance

Given the following table: Type of Security Interest Rate 5-Year Treasury Note 5% 5-Year Corporate Bond (High quality) 6% 5-Year Corporate Bond (Low quality) 8% Calculate the default risk premium (DRP) on the Corporate bonds.

80. ## MS.SUE PLS HELP ME

Please can you help me to solve and get the solution for these problems. how to get the solution please help me for my homework. question: 1.Find the price of a 10% coupon bond with 10 years to maturity if interest rates: A) increase by 1% B) decrease by

Please can you help me to solve and get the solution for these problems. how to get the solution please help me for my homework. question: 1.Find the price of a 10% coupon bond with 10 years to maturity if interest rates: A) increase by 1% B) decrease by

82. ## Economics - Bonds

The Garraty company has two bond issues outstanding. Both bonds pa \$100 annual interest plus \$1,000 at maturity. Bond L has a maturity of 15 years and Bond S a maturity of 1 year. A). What will be the value of each of these bonds when the going rate of

83. ## Finance

Heinz Corporation bonds carry a coupon of 8% and will mature in 5 years at \$1,000. Newly issued 5-year bonds with similar characteristics are yielding 4%. Calculate today's market price of the Heinz bond. Compute your answer, submit all your work, then

84. ## Finance

Heinz Corporation bonds carry a coupon of 8% and will mature in 5 years at \$1,000. Newly issued 5-year bonds with similar characteristics are yielding 4%. Calculate today's market price of the Heinz bond. Compute your answer, submit all your work, then

85. ## Finance

P5. A thirty U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be .2 percentage points for the longer maturity bond. Investors expect

86. ## finance

A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine

87. ## Finance

A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine

88. ## Math

1. Jill has a bond with a face value of \$1,000. The bond has a coupon rate of 6%. Find her current yield if the market price of the bond is \$1,027. 2. Calculate the annual interest you receive on a \$1000 Treasury bond with a current yield of 1.5% that is

89. ## Math

Term-structure of interest rates and Arbitrage The current term-structure of spot interest rates for safe zero-coupon bonds is as follows: Maturity, in years Interest rate (r) 1 8% 2 10% 3 11% 4 12% 5 13% There is a safe bond B which has 4 years before

90. ## help

The interest rate on a second mortgage was5 7/8 % last month. This month the interest rate is 7 3/2 %. How many percentage points has the interest rate increased? Are you sure you mean 7 3/2% ? No lender would write an intereest rate that way. Perhaps you

91. ## Economics

Isabella buys a \$1,000 bond that matures in 10 years (that is, she lends \$1,000 to the U.S. Treasury for 10 years). The bond pays her \$50 every year for 10 years. When the bond matures at year 10, she will receive her \$1,000 back as well as her last

92. ## economics

The current term-structure of spot interest rates for safe zero-coupon bonds is as follows: Maturity, in years Interest rate(r) 1 8% 2 10% 3 11% 4 12% 5 13% There is a safe bond B which has 4 years before maturity and pays a coupon of 12% at regular annual

93. ## Capital Markets

You work for an underwriter. The underwriter asks you to ¡§strip¡¨ a portfolio of treasury bond. The treasury bonds in question are all identical, they have 5 years to maturity, pay an annual coupon of 7.25% per year, payable annually, and they are

94. ## mathematicalmodel

The one-year and two-year risk-free rates (yields) are 1% and 1.025%, respectively. Our model of the term structure says that one year from now the one-year interest rate will be one of the following two values: 0.01 or 0.01*u, where u is the up factor.

95. ## COM155

Write two paragraphs about how interest rates affect our purchasing decisions. High interest rates make us stop and think, do we need this item? Is it a necessity? When interest rates are high people tend to finance things less. Why pay a lot in interest

96. ## Math

Bond Yields. An AT&T bond has 10 years until maturity, a coupon rate of 8 percent, and sells for \$1,100. a. What is the current yield on the bond? b. What is the yield to maturity? a) The current yield is \$80/1100 = 7.27% b) The yield to maturity (YTM) is

97. ## Finance

Interest rates on 2-year Treasury securities are currently 5.00%, while 5-year Treasury securities yield 10.00%. If the pure expectations theory is correct, what does the market believe that 3-year securities will be yielding 2 years from now?

98. ## Hogan

Please help identify the topic subject in each paragraph: Interest rates affect our purchasing decision in a two different ways. A lower interest rate is obviously preferred to minimize expenditure being either long or short term. A lower interest rate is

99. ## finance

Usha Manufacturing Co. has a bond of \$1000 par value outstanding. It pays interest annually and carries an annual coupon rate of 8%. Bonds are issued 2 years ago & due in 10 years. If the market rate of return on bonds is 7%. Required: a. What is the

100. ## Finance

Bob bought an 8.5% annual coupon bond at par. One year later, he sold the bond at a quoted price of 98. During the year, market interest rates rose and inflation was 3%. What real rate of return did Bob earn on this investment?