Why the large difference in present values in two situation

Assignment Help Econometrics

Reference no: EM131243752

CALCULATING PRESENT VALUES USING CURRENT INTEREST RATES

To see the current interest rates ("yields") on bonds issued by the U.S. government, please go to www. bloomberg.com/markets/rates/index.html and scroll down to the section labeled U.S. Treasuries. By tradition, U.S. government bonds with maturities of less than 1 year are called bills, while those with longer maturities are referred to as either notes or bonds. The notes have maturities of 1 to 10 years, while the bonds have maturities exceeding 10 years. What are the current yields on 2-year notes and 30-year bonds? Use the current yield for the 2-year note to calculate the present value of an investment that will make a single payment of $95,000 in 2 years. Use the current yield on the 30-year bond to calculate the present value of an investment that will make a single payment of $95,000 in 30 years. To assist your computations, you can try out the present value calculator available at www.timevalue.com/ tools.html. (When you go to that page, click on the Investment Calculators menu and then select "What is my future value worth today?" That will get you to the present value calculator.) Why the large difference in present values in the two situations?

Reference no: EM131243752

Questions Cloud

Which board members are near the ends of their terms : What is the composition of the Board with regard to age, gender, education, previous employment, and ethnic background? Which Board members are near the ends of their terms?

How does a debit card differ from a credit card : How do Fedwire and ACH transactions differ from credit card, debit card, and stored-value card transactions?

Critically think and solve engineering design problems : This assessment will test your ability to meet the learning outcomes as described in your module booklet, specifically: Critically think and solve engineering design problems and Investigate and analyse client and user requirements, technical briefs ..

In which stage of decision making does system best assist : In which stage (or stages) of decision making does each system best assist its respective user community -- intelligence stage, design stage, choice stage, and/or implementation stage? Discuss and justify your answer.

Why the large difference in present values in two situation : To assist your computations, you can try out the present value calculator available at www.timevalue.com/ tools.html. (When you go to that page, click on the Investment Calculators menu and then select "What is my future value worth today?" That w..

Which product contains the most total calories : Which product contains the most nutrients that are not as healthy for the body in large amounts? Which product is a healthier choice? Explain why you picked the product that you did in question 5. Your answer should be in paragraph format and should..

Is there a simple way for an actively managed fund : Why is it so hard for actively managed funds to generate higher rates of return than passively managed index funds having similar levels of risk? Is there a simple way for an actively managed fund to increase its average expected rate of return?

Explain the reason of your investment in the industry : ECONOMICS, FINANCE AND MARKETING BAFI-1042 - Explain the reason of your investment in the industry that you considered for creating your active portfolio 1 [Hint: use macro-economicvariables and/or industry specific qualitative factors].

What determines its vertical intercept : Consider the Security Market Line (SML). What determines its vertical intercept? What determines its slope? And what will happen to an asset's price if it initially plots onto a point above the SML?

User Account

All Pages