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Dafna1 [17]
4 years ago
15

The yield on a one-year Treasury security is 4.9200%, and the two-year Treasury security has a 7.3800% yield. Assuming that the

pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? ? 8.4150% O 9.9000% O 11.2860% 0 12.573096 Recall that on a one-year Treasury security the yield is 4.9200% and 7.3800% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.4000%. What is the market's estimate of the one-year Treasury rate one year from now? O 7.718096 9.080090 O 11.5320% O 10.3510%
Business
1 answer:
gayaneshka [121]4 years ago
7 0

Answer:

Option (b) is correct.

Option (b) is correct.

Explanation:

1. Pure Expectation Theory :

Each option must provide the same amount of cash at the end of 2 years, which implies that,

CF at the end of year 2 = CF at the end of year 1

[tex](1+0.0738)^{2} = (1+0.0492) (1+x) [tex\]

Hence, x = 9.90

so the market's estimate of the one year Treasury rate one year from now it will be 9.90%

2. In case of maturity risk premium, the cash flow of two year treasury security will reduce, it will be:

= 7.38 - 0.40

= 6.98.

Hence, Treasury Rate will be as follows:

CF at the end of year 2 = CF at the end of year 1

[tex](1+0.0698)^{2} = (1 + 0.0492) (1 + x)[tex\]

x = 9.080%

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The founding fathers divided our system of government into three distinct branches. What are these branches and how did the foun
riadik2000 [5.3K]

Answer:

The US constitution partitions government into three unmistakable branches.These branches are:  

(an) Executive  

(b) Legislative  

(C) Judicial branches  

This idea is additionally called "partition of forces". Each branch is equivalent to the next i.e each branch is autonomous from the other, however every hold same position and yes the facts confirm that the establishing father legitimize each part of government as vital for a sound republic Because the establishing father assume a significant job to partition the framework into three branches.  

Governing rules: Each branch have its own duties and simultaneously, for the smooth running of the nation these three branches cooperate thus, that the privileges of residents are not overlooked and each resident treated equivalent to other and This is conceivable or done through checks and balances.A branch may utilize its forces so as to keep up a level of influence between these three branches.By this, nobody branch hold more force. each branch hod balanced governance over the other.  

INTERESTS OF MINORITY SHAREHOLDERS OVER MAJORITY SHAREHOLDERS:  

Significant piece of India's populace by and large comprises of minority part the interests of minorities are retained by the administration to more prominent degree , in practically all the areas, for example, training, modern, science and medicals, minorities are given significant significance . Numerous administration motivation are likewise embraced by the judicial,executive and council level of the legislature.  

Result: The ancestors separated the legislature into 3 kinds, in order to give equivalent rights all the interests of people at all levels. Such in detail is as of now clarified above in the above segment.

5 0
4 years ago
Each of the following situations is independent. Work out your own solution to each situation, and then check it against the sol
saw5 [17]

Morgan will get $1600 with the process of simple interest.

<h3>what is simple interest?</h3>

Simple interest is calculated based on a loan's principal or the initial deposit into a savings account. Simple interest doesn't compound, therefore a creditor will only charge interest on the principal sum, and a borrower will never be required to pay further interest on the interest that has already accrued.

Rate of interest = 12%

principal = $1000

Time = 5 years

Simple interest

=\frac{1000 \times 5 \times 12}{100}\\=600

Now amount = 1000+600 = 1600.

Therefore, Morgan will get $1600.

To learn more about simple interest from the given link

brainly.com/question/25793394

#SPJ4

8 0
2 years ago
1. Question 1 Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent t
Blizzard [7]

Answer:

B. What must be given up to acquire it

Explanation:

The opportunity cost is the cost which is to be sacrificed to gain for some better option

Since in the given case the aunt is thinking to open a hardware store but it will cost her $500,000 for rent and the to purchase the stock

And, also she also have to quit her accountant job for $50,000

So in this option quitting the job is to be considered as an opportunity cost

7 0
3 years ago
During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On
uysha [10]
1)correct option is "C" -Kena recognizes a gain of $30,000 Value in basis of land = 650000-5000
3 0
3 years ago
Morrow Corp. has an EBIT of $925,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the c
Vladimir79 [104]

Answer:

The answer is given below;

Explanation:

WACC=EBIT*(1-t)/(E+D)

13%=$925,000*(1-25%)/(E+D)

E+D=$693,750/.13

E+D=$5,336,538

Where E+D is market value of firm

7 0
3 years ago
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