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

1 what is the importance for an individual of understanding

1. What is the importance for an individual of understanding time value of money concepts? For a corporate manager? Under what circumstance would the time value of money be irrelevant? 2. From a time value of money persp ...

Starz inc pays a constant dividend of 16 for next 18 years

STARZ INC pays a constant dividend of $16 for next 18 years then will stop paying dividends forever. If investors require a return of 8.3% on this stock, what is the value of the STARZ stock? Write in the value with two ...

If the calculated value of f is found to be significant for

If the calculated value of F is found to be significant for the main effect of an independent variable with more than two levels, what tests does the researcher then conduct? Why are such tests not necessary if the indep ...

1 explain how replication can be conceptualized as a

1. Explain how replication can be conceptualized as a factorial experimental design. 2. Why are research programs more important to the advancement of science than are single experiments? 3. Define a meta-analysis, and e ...

What factors would determine whether a particular strategy

What factors would determine whether a particular strategy is a hedge or a speculative strategy? How are spread and arbitrage strategies forms of speculation? How can they be interpreted as hedges? What are the differenc ...

Wilmas vegetable market had the following transactions

Wilma's Vegetable Market had the following transactions during 2012: 1. Issued $25,000 of par value common stock for cash. 2. Recorded and paid wages expense of $10,000. 3. Acquired land by issuing common stock of par va ...

Hott inc receives a 2 million payment once a year of this

Hott Inc. receives a $2 million payment once a year. Of this amount, $800,000 is needed for cash payments made during the next year. Each time Hott deposits money in its account, a charge of $2.00 is assessed to cover cl ...

For each of the following operational definitions decide

For each of the following operational definitions, decide whether you consider it to be a valid measure. Explain why or why not. Decide whether you consider it to be a reliable measure. Explain why or why not. a. A resea ...

1 why is a loan for a condominium more difficult to analyze

1. Why is a loan for a condominium more difficult to analyze than one for a free-standing house? 2. Distinguish between a survey and a legal description. 3. Give an example of a physical characteristic of a house that co ...

1 outline the differences between npv irr and pi what are

1. Outline the differences between NPV, IRR, and PI. What are the advantages and disadvantages of each technique? Do they agree with regard to simple accept or reject decisions? 2. Under what circumstances will the NPV, ...

  • 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