What is the one-year treasury security rate

Assignment Help Financial Management
Reference no: EM13987940

Suppose we observe the three-year Treasury security rate (1R3) to be 5.3 percent, the expected one-year rate next year—E(2r1)—to be 5.8 percent, and the expected one-year rate the following year—E(3r1)—to be 6.2 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate?

Reference no: EM13987940

Questions Cloud

Calculate the securitys default risk premium : A particular security’s equilibrium rate of return is 9 percent. For all securities, the inflation risk premium is 3.80 percent and the real risk-free rate is 2.8 percent. The security’s liquidity risk premium is 0.35 percent and maturity risk premiu..
Designing an application utilizing event-driven programming : Designing an application utilizing event-driven programming - the Model-View-Controller design pattern - You can review the code of the program "Puzzler" seen in lab 4 to help you with the class DotButton.
What is the value of the lump sum : What is the lump sum deposited today at 8% compounded qrtly for 10 years, will yeild the same amount if $4000 deposit with 6% interest end of 6 months compound simi annual, 10 years. What is the value of the lump sum?
Finding the changing interest rates over time : Give two alternatives. Be sure you explain how the alternatives work so that even a government regulator could understand it. As part of your answer be sure to discuss the two risks that bond holders are exposed to because of changing interest rat..
What is the one-year treasury security rate : Suppose we observe the three-year Treasury security rate (1R3) to be 5.3 percent, the expected one-year rate next year—E(2r1)—to be 5.8 percent, and the expected one-year rate the following year—E(3r1)—to be 6.2 percent. If the unbiased expectations ..
Total of ten consecutive cash flows : Suppose you deposit $529 five years from today and each year thereafter deposit $529 for a total of ten consecutive cash flows (CF's); i.e. ten consecutive annual CF's beginning five years (t = 5) from today. Calculate the present value today (t = 0)..
Effect of preferred stock dividends : What guidance does the SEC provide for public companies with respect to the reporting of the "effect of preferred stock dividends and accretion of carrying amount of preferred stock on earning per share?
Estimate the sream flow rate and compositions : For a production rate of 1250kg/h M.E.K- draw a flowsheet for the process and estimate the sream flow rate and compositions.
Acting is considered as a good profession : in your opinion, is acting considered a "good" profession (regardless of the gender) or does it still have a taint of immorality attached to it?

Reviews

Write a Review

Financial Management Questions & Answers

  Noncash compensation

Noncash Compensation. For each of the following items indicate, whether the individual taxpayer must include any amount in gross income. Employees of Eastside Bookstore are given their birthdays off with pay.

  The presidents executive jet is not fully utilized

The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $20,000 a year and would save $100,000 a year in airline bills. Assume that the company does not pay taxes. Al..

  Why does the binomial model converge to a specific value

Why does the binomial model converge to a specific value of the option as the number or time periods increase? To what value does the option converge? When "n" approaches infinity, to what famous model does the binomial model converge?

  What is the dollar amount of income

London purchased a piece of real estate last year for $85,900. The real estate is now worth $102,000. If London needs to have a total return of 0.23 during the year, then what is the dollar amount of income that she needed to have to reach her object..

  Relationship with sales increase in financial forecasting

Forecast and holding company balance sheet, you bring a balance sheet and determine all items that have direct relationship with sales increase, don’t bring a template version of a balance sheet, bring a new/real one and determine all the items that ..

  The annualized cost of the trade credit terms

If a firm buys on trade credit of 1/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 360-day year)? The annualized cost of the trade credit terms of 1/15,..

  What is the effective annual cost of trade credit under term

Pet Store Inc. sells on terms of 2/10, net 50. What is the effective annual cost of trade credit under these terms? Use a 365-day year. Please show formula and explain step by step. I've tried other formulas on here and continue to get the wrong answ..

  Create a model that will automatically calculate the

create a model that will automatically calculate the minimum variance and optimal portfolio as well as be able to draw

  Financial statements and entity-level controls

Auditors need to use a top-down approach to identify controls to test. This approach starts at the top of an organization (financial statements and entity-level controls) and helps to link the financial statements to significant accounts, relevant as..

  Financial planner has suggested two additional options

You just inherited $1,000,000. Instead of taking a lump sum, a financial planner has suggested two additional options. First, you invest in an annuity that will pay you $125,000 per year for 10 years. The discount rate is 8% for both options. The sec..

  Mutual fund at the beginning of the year

You invested $75,000 in a mutual fund at the beginning of the year when the NAV was $47.24. At the end of the year the fund paid $.37 in short-term distributions and $.54 in long-term distributions. If the NAV of the fund at the end of the year was $..

  Cash and marketable securities

From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $1,100,000, inventory = $2,000,000, accrued wages and taxes = $500,000, accounts payable = $600,000, and notes payable = $100,000..

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