Yield Curve Assignment | Homework For You
June 2nd, 2020
Select one:
a. The liquidity risk premium on T-bonds decreases as years to maturity () increases.
b. The maturity risk premium on T-bonds decreases as years to maturity (T) increases.
c. The real risk-free rate on T-bonds remains the same as years to maturity (T) increases.
d. The default risk premium on T-bonds decreases as years to maturity (T) increases.
e. The inflation premium on T-bonds has to increase as years to maturity (T) increases. You observe the following yield curve for Treasury securities:
Maturity Yield 5.5% 1 year 2 years 5.8% 6.0% 3 years 4 years 6.3% 5 years 6.5%
Assume that the pure expectations hypothesis holds. What is the predicted interest cost if you plan to borrow for 2 years, starting 3 year from today?
Select one:
a. 7.25% b. 6.75% c. 6.30% d. 6.97% e. 6.40%. Get Finance homework help today