Current rate for two-year treasury security

Assignment Help Financial Management
Reference no: EM131886445

1. The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.10 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Current rate %

2. Which has a longer Macaulay’s duration: a zero coupon bond with a twoyear maturity, or a two-year maturity coupon bond that pays 6 percent coupon interest if they both carry a 6 percent market yield?

Reference no: EM131886445

Questions Cloud

Discuss specific delivery terms that exporters and importers : Discuss specific delivery terms that exporters and importers can use to minimize these factors.
Optimal capital structure consists : Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%.
What is environmental risk to an investor in property : What is "Environmental Risk" to an Investor in Property? Should Leasing Commissions be considered when Investing in Real Estate?
Define transaction exposure : Define transaction exposure. Why is transaction exposure the most important type of currency exposure?
Current rate for two-year treasury security : According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?
Toll road can be built one of two ways : A toll road can be built one of two ways. It can be built as one entity and opened at once at an initial cost of $20 M.
Types of profitable investment opportunities : Explain how to identify the sources and types of profitable investment opportunities. What makes an investment profitable?
New firm in rapidly growing industry : The Bell Weather Co. is a new firm in a rapidly growing industry. What is the current value of one share of this stock if the required rate of return is 8.20 %
Describe the money market approach : Describe the money market approach, how it would work, and how much the firm ends up with

Reviews

Write a Review

Financial Management Questions & Answers

  A stock book value

A stock's book value:

  Expected market risk premium and risk-free rate

The current stock price for a company is $45 per share, and there are 4 million shares outstanding. The beta for this firms stock is 1.2, the risk-free rate is 4.6, and the expected market risk premium is 6%. what is the Weighted Average Cost of Capi..

  Preparing an order and receiving shipment of nails involves

Our home construction company still buys nails in 15-pound boxes but now we use an average of 4790 boxes a year. Preparing an order and receiving a shipment of nails involves a cost of $1.55 per order. Annual carrying costs are $0.6 per bag. What wil..

  Compute the internal rate of return for each investment

Using the two design options for the Gore pleating machine examined in the discussion session, compute the internal rate of return for each investment. Interpolate the ROR to the nearest 1%, and use the interest tables to determine your answers. Whic..

  Jernigan corporation balance sheets

Condensed balance sheet and income statement data for Jernigan Corporation are presented here: Compute the following ratios for 2013 and 2014.

  The return on long-term corporate bonds

Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 5.3% and a standard deviation of 8.1%. How likely is it that such a high retur..

  What is the yield to maturity on the company debt

What is the required return on the corporation’s stock? What is the yield to maturity on the company’s debt?

  Hedge of an anticipated purchase

On December 1, 2008, Jolly Rice Company enters into a 90-day forward contract with a rice speculator to purchase 500 tons of rice at $1,000 per ton. Jolly Rice enters into this contract in order to hedge an anticipated rice purchase. Prepare the requ..

  Cautionary would immediately sell some of danger assets

Cautionary would immediately sell some of Danger's assets for $15,000 if it makes the acquisition.

  Firm required rate of return on equal-risk investments

If the firm's required rate of return on equal-risk investments is 25% should the proposed discount be offered?

  Corporate bond-what will be change in the price of bond

A corporate bond with a face value of $1000 and a coupon rate of 5% has only 4 years remaining to maturity. Because of its credit rating, this bond has a yield of 6.5%. The rating agencies just upgraded the bond, and as a result its discount rate fel..

  Dollar-weighted rate of return in this financial agreement

What is Suzanne's dollar-weighted rate of return in this financial agreement, assuming simple interest for the rate of return?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd