Answer:
The correct option is C,investors expect future short rates to be lower than the current 3 month interest rate.
Explanation:
The yield to maturity is the effective interest rate on a debt obligation which implies the actual return that investors receive by investing in bonds.
The yield to maturity is different from the coupon interest which is the actual amount of cash receivable by investors periodically.
Specifically,a higher yield on short term T-bill means that investors expect that the future interest rates on long-term dated bonds to be much lower.
This is due to the fact the longer the time to maturity the more uncertain the interest rates in the bond markets become.
Answer:
organizes computer folders and files
Answer:
(a) If the discount rate is 11 percent, what is the future value of these cash flows in year 4?
To solve this problem, we must find the FV of each cash flow and add them.
To find the FV of a lump sum, we use:
FV = PV(1 + r)^t
[email protected]% = $625(1.11)^3 + $875(1.11)^2+ $1,150(1.11) + $1,250 = $4459
(b) What is the future value at a discount rate of 18 percent?
FV = PV(1 + r)^t
[email protected]% = $625(1.18)^3+ $875(1.18)^2+ $1,150(1.18) + $1,250 = $4852
(c) What is the future value at discount rate of 30 percent?
FV = PV(1 + r)^t
[email protected]% = $625(1.30)^3+ $875(1.30)^2+ $1,150(1.30) + $1,250 = $5597
The answer may likely be letter a, Jena can keep the bulldozers and sue David for the full purchase price but if David has not sign any contract in regards with the bull dozers that he had purchased then Jena will not have the right to sue David but instead, letter d, resell or dispose of the goods in the open market.
