Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

find out the one-year forward rates of interest implied by the November 1992 yield curve over the period 1993-2002.

We need a starting point. Use 1993 as 3.8% 4.65 = 2 year rate = (3.8+x)/2.

According to the expectations theory, the 2 year rate = sum of the previous year's rate and the year before that, or the 2 previous 1 year rates.

x = 5.5 %

That is your answer for 1994.

Next, for 1995, you have a 3-year rate = 5.23 = (3.8+5.5+x)/3

x = 6.39 %

Maturity Aug-91 Aug-92 Nov-92

3 m 5.33% 3.13% 3.20%

6 m 5.39% 3.21% 3.43%

1 yr 5.78% 3.47% 3.80%

2 y 6.43% 4.19% 4.65%

3 y 6.80% 4.72% 5.23%

4 y 7.23% 4.86% 5.72%

5 y 7.43% 5.60% 6.12%

6 y 7.51% 5.87% 6.34%

7 y 7.74% 6.12% 6.56%

8 y 7.79% 6.32% 6.87%

9 y 7.86% 6.47% 6.95%

10 y 7.90% 6.59% 7.18%

30 y 8.14% 7.39% 7.53%

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M944781

Have any Question? 


Related Questions in Basic Finance

What is operating cash flow ocf how is it calculatedwhat is

What is operating cash flow (OCF)? How is it calculated? What is free cash flow (FCF)? How is it calculated from OCF? Why do financial managers focus attention on the value of FCF?

Abc corp is contemplating forming a new enterprise to

ABC Corp. is contemplating forming a new enterprise to produce cell phones. The sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit is estimated to be $2.50; and management estima ...

What do we mean by the term torque reaction a right angle

What do we mean by the term torque reaction? A right angle nut runner is used to produce 500 ft-lb of torque on a bolt having a 7/8 -9 UNC thread. The tool is 18 in. long. How much reaction force, created by the reaction ...

1 what does investment grade mean in the context of

1. What does "investment grade" mean in the context of corporate bond issues? How do these bonds differ from junk bonds, and why have the latter proven so popular with investors? 2. What is a Eurobond? Why did these bond ...

A small firm makes three similar products which all follow

A small firm makes three similar products, which all follow the same three-step process, consist- ing of milling, inspection, and drilling. Product A requires 12 minutes of milling, 5 minutes for inspection, and 10 minut ...

Select one construct from the following Select one construct from the following list:

Select one construct from the following list: self-esteem femininity/masculinity creativity hunger motivation fear Briefly describe how it might be measured using: a. an operational definition based on selfreport (for ex ...

1 visit the nvoad website and find out what organizations

1. Visit the NVOAD website, and find out what organizations are members of your state VOAD ( http://www.nvoad.org/membersdb.php?members state ). 2. Contact your state office of emergency management, and ask them if your ...

1 what factors should an investor consider when trying to

1. What factors should an investor consider when trying to decide whether to dispose of a property that he has owned for several years? 2. What causes the marginal rate of return to change over time? How can the marginal ...

Us federal law regulates some futures market participants

U.S. federal law regulates some futures market participants, even though they do not directly participate in trading. Explain the difference between an introducing broker, a commodity trading advisor, a commodity pool op ...

1 what would cause the rate of return for an investor that

1. What would cause the rate of return for an investor that purchases real estate and leases it to the corporation to differ from the rate of return earned by the corporation on the incremental investment in owning versu ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro