What should be current rate for two-year treasury security

Assignment Help Financial Management
Reference no: EM13985599

The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.00 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))

Reference no: EM13985599

Questions Cloud

What is your capital gain on this investment : You just sold 200 shares of Langley, Inc. stock at a price of $38.75 a share. Last year you paid $41.50 a share to buy this stock. Over the course of the year, you received dividends totaling $1.64 per share. What is your capital gain on this investm..
Semiannual payments-what is the value three years from now : A 4-year annuity of eight $9,800 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 7 percent compounded monthly, what is the value of this annuity five years from now? If the di..
Result an initial aftertax cash savings : Scanlin, Inc., is considering a project that will result an initial aftertax cash savings of $2.1 million at the end of the first year, and these savings will grow at a rate of 2% per year indefinitely. The firm has a target debt-equity ratio of .80,..
What is the mullineux wacc : Mullineaux Corp. has a target capital structure of 70% common stock, 5% preferred stock, and 25% debt. Its cost of equity is 11%, the cost of prefered stock is 5%, and the pretax cost of debt is 7%. The relevant tax rate is 35%. What is the mullineux..
What should be current rate for two-year treasury security : The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.00 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?
Which is more relevant-pre-tax or the aftertax cost of debt : Jiminy’s Cricket Farm issued a 30-year, 7% semiannual bond 3 years ago. The bond currently sells for 93% of its face value. The company’s tax rate is 35%. what is the pretax cost of debt? A) What is the aftertax cost of debt? B) Which is more relevan..
According to the unbiased expectations theory : The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.00 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?
Stand regenerates naturally with no regeneration cost : A northern hardwood stand regenerates naturally, with no regeneration cost. Every 65 years, it can be harvested to yield 12/mbf/ac of hardwood sawtimber at $300/mbf and 12 cd/ac of pulpwood at $5 per cord. The annual management expenses are $2.50/ac...
Compounding factors-discounting factors and financial risk : Most of us intuitively understand that a dollar required today does not have the same value as a dollar needed (or utilized) in the future. This is due to several factors including interest rates, compounding factors, discounting factors and financia..

Reviews

Write a Review

Financial Management Questions & Answers

  Identify three alternative methods to the dividend discount

Identify three alternative methods to the dividend discount model for the valuation of companies.

  Uses straight-line depreciation to a zero book value

Kurt's Kabinets is looking at a project that will require $80,000 in fixed assets and another $20,000 in net working capital. The project is expected to produce sales of $110,000 with associated costs of $70,000. The project has a 4-year life. The co..

  An asset has had an arithmetic return-geometric return

An asset has had an arithmetic return of 10.5 percent and a geometric return of 8.5 percent over the last 94 years. What return would you estimate for this asset over the next 12 years? 18 years? 32 years?

  What is the equity multiplier and return on equity

Locker Company has a debt-equity ratio of .65. Return on assets is 9.8 percent, and total equity is $850,000. What is the equity multiplier? Return on equity? Net income?

  Compute the no-arbitrage price of a treasury note

Suppose an investor would like to buy 200 Treasury notes. The investor wants notes with an annual coupon rate of 7%, a 3-year maturity, and semi-annual coupon payments. Assume each Treasury note has a par value of $1,000. Assuming the yield curve is ..

  Sustainable and internal growth rates

Find the sustainable and internal growth rates for a firm with the following ratios: asset turnover = 2.00; profit margin = 7%; payout ratio = 30%; equity/assets = .60. (Do not round intermediate calculations. Enter your answers as a percent rounded ..

  Determine the magnitude of year 0 investment

Reclamation costs on a project are expected to be incurred over a 30 year period from 27 to 56 years in the future from now. Reclamation costs are estimated to escalate 5.0% per year in the future

  Cash flow impact and the projects net present value

COMM Company is considering an investment in a new inventory control system. The system will require a substantial up-front investment but is expected to provide annual cash cost savings for the next 6 years. Prepare an exhibit that displays the outc..

  Return is reasonable given the nature of the risks involved

You are making a $120,000 investment and feel that a 20 percent rate of return is reasonable given the nature of the risks involved. You feel you will receive $48,000 in the first year, $54,000 in the second year, and $56,000 in the third year. You e..

  Discuss and analyse all the issues in order

Discuss and analyse all the issues in order, and any other implications arising from this scenario for presentation to Mark Golledge .

  Requires four standard gallons per unit

Giovanni Company produces a product that requires four standard gallons per unit. The standard price is $34.00 per gallon. Assume the company produced 3,500 units of product. The 3,500 units required 14,400 gallons, which were purchased at $33.25 per..

  Life insurance needs analysis case

Your friend John asks you for advice concerning life insurance. John is 34 years old and graduated from law school last year. He currently earns $24,000 per year as a waiter, but is looking for a position with a local law firm. John picks up Billy fr..

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