What is the yield on an 8-year treasury bond

Reference no: EM13296197

The real risk free rate of interest r*, is 3% and it is expected to remain constant over time. Inflation is expected to be 2% for the next 3 years and 4% for the next 5 years. The maturity risk premium isequal to 0.1 (t-1)%, where t=the bond's maturity. The default risk premium for a BBB-rated bond is 1.3%.

a) What is the average expected inflation rate over the next 4 years?
b) What is the yield on a 4-year Treasury bond?
c) What is the yield on a 4-year BBB-rated corporate bond with a liqidity premium of 0.5%?
d) What is the yield on an 8-year Treasury bond?
e) What is the yield on and 8-year BBB-rated corporate bond with a liquidity premium of 0.5%?
f) If the yield on a 9-year Treasury bond is 7.3%, What does that imply about expected inflation in 9-years?

Reference no: EM13296197

Questions Cloud

What the effective annual return friendly earns : Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $14.50 when you get your paycheck in one week (or else). What's the effective annual return Friendly's earns on this lending business? I know the APR is 3939.39393939%

What kind of deal did the athelete snag : If the appropriate interest rate is 8 percent, what kind of deal did the athelete snag? Assume all payments other than the first $4.00 million are paid at the end of the year.

Find the magnitude of the magnetic force on the electron : At a particular instant an electron is traveling in the +y direction, with speed 7105 m/s. find the magnitude of the magnetic force on the electron

Design a one input and one output serial 2s complementer : Design a one input, one output serial 2's complementer. The circuit accepts a string of bits from the input and generates the2's complement at the output. The circuit can be resetasynchronously to start and end the operation.

What is the yield on an 8-year treasury bond : The maturity risk premium isequal to 0.1 (t-1)%, where t=the bond's maturity. The default risk premium for a BBB-rated bond is 1.3%.

How large will your retirement account be in 31 years : You are to make monthly deposits of $800 into a retirement account that pays 9.8 percent interest compounded monthly. Required: If your first deposit will be made one month from now, how large will your retirement account be in 31 years?

Find the average induced emf in the wire during this time : A four-turn circular wire coil of radius 0.495 m lies in a plane perpendicular to a uniform magnetic field of magnitude 0.415 T. what is the average induced emf in the wire during this time

What is the tom current stock price after the recap : Tom Co value of operations is worth $1.2B after a recapitalization. Tom raised $300M in debt to buy back stock.

A substances are most likely to undergo dissolution in water : Five different substances are given to you to be dissolved in water. Which substances are most likely to undergo dissolution in water

User Account

All Pages