Questions from Financial Markets

Q: Assume that the interest rate on a one-year Treasury bill

Assume that the interest rate on a one-year Treasury bill is 6 percent and the rate on a two-year Treasury note is 7 percent. a. If the expected real rate of interest is 3 percent, determine the infla...

Q: A Treasury note with a maturity of four years carries a nominal

A Treasury note with a maturity of four years carries a nominal rate of interest of 10 percent. In contrast, an 8-year Treasury note has a yield of 8 percent. a. If inflation is expected to average 7...

Q: 1. The European Union at the end of 2015 consisted of

1. The European Union at the end of 2015 consisted of how many independent member states? a. 6 b. 12 c. 18 d. 28 2. How many member states are currently Eurozone members? a. 19 b. 15 c. 12 d...

Q: The interest rate on a 20-year Treasury bond is 9

The interest rate on a 20-year Treasury bond is 9.25 percent. A comparable maturity Aaa-rated corporate bond is yielding 10 percent. Another comparable maturity but lower quality corporate bond has a...

Q: A 30-year corporate bond has a nominal interest rate of

A 30-year corporate bond has a nominal interest rate of 12 percent. This bond is not very liquid and consequently requires a 2 percent liquidity premium. The bond is of low quality and thus has a defa...

Q: Following are some selected interest rates. /

Following are some selected interest rates. a. Plot a yield curve using interest rates for government default risk-free securities. b. Plot a yield curve using corporate debt securities with low def...

Q: A one-year U.S. Treasury security has a

A one-year U.S. Treasury security has a market interest rate of 2.25 percent. If the expected real rate of interest is 1.50 percent, what is the expected annual inflation rate?

Q: A 20-year U.S. Treasury bond has a

A 20-year U.S. Treasury bond has a 3.50 percent interest rate, while a same maturity corporate bond has a 5.25 percent interest rate. Real interest rates and inflation rate expectations would be the s...

Q: A 30-year U.S. Treasury bond has a

A 30-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury note has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over...

Q: A thirty-year U.S. Treasury bond has a

A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury note has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage p...