Which of these facts can be explained by expectation theory

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1. List three empirical facts about the term structural of interest rates. Which of these facts can be explained by the Expectation Theory?

2. Today, you purchased a futures contract obligating you to purchase 100 troy ounces of gold for $1,220 per ounce any time over the next month. The current price of gold is $1,218. Assume the spot price of gold falls to $1,216 tomorrow. What will be your cash flow tomorrow for this contract?

3. One year ago a $1,000 face value, 6% coupon bond was selling for $1,100. Since then, the market yield has decreased by two percentage points. The bond pays interest semiannually and now has four years to maturity. What is the bond's price today?

Reference no: EM131935753

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