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dusya [7]
3 years ago
14

One-year Treasury securities yield 4%. The market anticipates that 1-year from now 1-year Treasury securities will yield 2.1%. I

f the pure expectations theory is correct, what should be the yield today for 2-year Treasury securities? Write your answer as a percentage, i.e. for example write 8% as 8.
Business
1 answer:
Lesechka [4]3 years ago
8 0

Answer:

3.05%

Explanation:

According to Pure Expectation Theory, the future short term interest rates are actually the forward rates.

Mathematically,

(1 + r2,0)^2 = (1 + r1,0)^1 * (1 + r1,1)^1

Here,

r2,0 is the rate of interest for 2 year treasury security from today

r1,0 is the rate of the interest for 1 year treasury security from today

r1,1 is the rate of the interest for 2 year treasury security from Year 1

By Putting Values, we have:

(1 + r2,0)^2 = (1 + 0.04)^1 * (1 + 0.021)^1

(1 + r2,0)^2 = 1.06184

By taking square-root on both sides, we have:

(1 + r2,0) = 1.0305

r2,0 = 3.05%

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True

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3 years ago
What is management and leadership​
murzikaleks [220]

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2 years ago
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The consumer decision making process is comprised of these five steps: Need recognition, Environmental Scanning, Evaluation of a
Goshia [24]

Answer:

need recognition, information search, evaluation of alternatives, purchase, and post purchase behavior

Explanation:

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5 0
2 years ago
Vinson Company purchased a patent for $180,000 at the beginning of Year8, and estimated that its expected useful life was 5 year
Alona [7]

Answer:

amortization expense is $36000

Explanation:

given data

purchased = $180000

time = 5 year

to find out

amount recorded as amortization expense

solution

we know here purchased  patent  for 180000 and here life is 5 years

so here

amortization expense will be purchased / time

amortization expense =  purchased / time

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6 0
3 years ago
The following information is available for Sheridan Company
Arte-miy333 [17]

Answer:

See below

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Balance sheet as of December 31, 2022.

Current assets

Account receivable $2,000

Cash $6,280

Supplies $3,790

Total $12,070

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Inventory $2,810

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Accounts payable $3,900

Interest payable $500

Salaries and wages payable $740

Notes payable $32,500

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= $37,640 + $52,500

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6 0
3 years ago
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