problem 1: Three-year Treasury securities presently yield 6%, while 4-year Treasury securities presently yield 6.5%. Suppose that the expectations theory holds. What does the market believe the rate will be on 1-year Treasury securities three years from now?
problem 2: The real risk-free rate is 3%. The market expects that the inflation of 3% for each of next 5 years, and 5% a year afterward. The maturity risk premium is estimated to be MRPt = 0.1% (t − 1). Determine the yield on a Treasury bond which matures in 12 years? Disregard cross-product terms, that is, if averaging is required, utilize the arithmetic average.
problem 3: Brown Enterprises bonds presently sell for $1,025. They have a 9-year maturity, an annual coupon of $80, and a par value of $1,000. Determine their yield to maturity?
problem 4: Brown Enterprise’s bonds presently sell for $1,025. They have a 9-year maturity, an annual coupon of $80, and a par value of $1,000. Find out their current yield?
problem 5: Yest Corporation's bonds encompass a 15-year maturity, a 7% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6%, based upon semiannual compounding. Determine the bond's price?