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Usimov [2.4K]
3 years ago
5

nterest rates on 2-year Treasury securities are currently 6.0%, while 6-year Treasury securities yield 6.5%. If the pure expecta

tions theory is correct, what does the market believe that 4-year securities will be yielding 2 years from now
Business
1 answer:
Irina18 [472]3 years ago
7 0

Answer:

The market believes that 4-years from now, the 4-year securities will be 6.75%

Explanation:

We proceed as follows using the pure expectations theory .

The theory states that the future rates are exclusively represented by the forward rate.

Mathematically;

(1 + .065)^6 = (1 + .^206)2 * (1 + x)^4

1.4591 = 1.1236 * (1 + x)^4

Divide both sides by 1.1236

1.2986 = (1 + x)^4

Take both sides to the 1/4 power to get rid of the power of 4

1.0675= 1 + x

x = .0675 or 6.75%

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Predict how the shift in the location of Toyota’s production from Japan to the United States is likely to alter the pattern of c
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4 years ago
Read 2 more answers
An account balance is:Select one:a. The total of the credit side of the account.b. The total of the debit side of the account.c.
Umnica [9.8K]

Answer:

c. The difference between the total debits and total credits for an account including the beginning balance.

Explanation:

An account wil be a concept of reality represent under a given label which, contains information about transaction that modifies their valuation in the company.

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4 years ago
Which country has recently passed the united states in the value it places on competition according to the world values study?
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The correct answer is China.
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8 0
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