Calculate the expected real world yield for a person who, Ask an Expert

Economics

Given the following pure expectations information:

• 1-year note yield = 7.43% 4-year note yield = 7.21%
• 2-year note yield = 7.49% 5-year note yield = 7.53%
• 3-year note yield = 7.05% 6-year note yield = 7.53%

Given constant premiums of 0, .06%, .11%, .14%, .16%, and .165%.

a. Assuming pure expectations, find out the expected yields for someone who purchases a 2-year note, a 1- year note, a 2-year note, and then a 1-year note in consecutive order (thus they are lending for the next 6 years).

b. find out the expected real world yield for a person who purchases a 3-year note today and then another 3-year note when that first one matures (again lending for 6 years).

c. Determine the expected real world yield on a 5-year note purchased today.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M953005

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