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Ivenika [448]
3 years ago
5

The real risk-free rate is expected to remain constant at 3% in the future, a 2% rate of inflation is expected for the next 2 ye

ars, after which inflation is expected to increase to 4%, and there is a positive maturity risk premium that increases with years to maturity. Given these conditions, which of the following statements is CORRECT?
A) The yield on a 2-year T-bond must exceed that on a 5-year T-bond.

B) The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond.

C) The yield on a 7-year Treasury bond must exceed that of a 5-year corporate bond.

D) The conditions in the problem cannot all be true--they are internally inconsistent.

E) The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope.
Business
1 answer:
atroni [7]3 years ago
5 0

Answer:

B) The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond.

Explanation:

The yield on 5-year Treasury bond must be higher than a 2-year Treasury bond. This is because the expected inflation rate after 2-years will be constant at 4% and there is also a maturity risk premium which increase with the increase in maturity of the bond. Therefore, the correct answer is option B.

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How can you recognize a commercial vessel towing at night?
natka813 [3]
You can recognize a commercial vessel towing at night by its towing light based on the boat safety rules. A commercial boat has one light or more which indicates it is towing or not at the night time. This light has a yellow color and this light is called the towing light which functions as a towing sign for a commercial vessel<span>.</span>
5 0
3 years ago
Alan Jackson invests $20,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 yea
kondaur [170]

Answer:

a. $32,800

b. $37,019

c. $37,460

Explanation:

a. The computation of Total Amount Withdrawn by Alan when simple interest is shown below:-

Accumulated amount of money = Invested amount + (Rate of interest × Number of years)

= $20,000 + ($20,000 × 8% × 8)

= $32,800

b. The computation of Total Amount Withdrawn by Alan when annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest)^Number of years

= $20,000 × (1 + 0.08)^8

= $20,000 × 1.85093

= $37,019

c. The computation of Total Amount Withdrawn by Alan when semi annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest × Number of years ÷ 200)^16)

= ($20,000 × (1 + 0.08 × 8 ÷ 200)^16)

= $20,000 × 1.87298

= $37,460

Therefore we have applied the above formulas.

5 0
3 years ago
During the current year, Cary and Bill incurred acquisition debt on their residence of $1,300,000 and a home equity loan of $200
77julia77 [94]

Answer:

qualified acquisition debt = $750,000

qualified home equity debt = $0

Explanation:

Qualified acquisition debt refers to the debt incurred to purchase or build your home. In this case, Cary and Bill are allowed to itemize the interests paid for up to $750,000 of the acquisition debt ($375,000 if filing separately). This limit was reduced due to the TCJA of 2017, and will remain in place until 2025. After 2025, the limit will return to the normal $1,000,000.

Certain amount of interests on qualified home equity loans will also return in 2025, but currently they are not deductible.  

8 0
3 years ago
In most organizations, who is primarily responsible for appraising an employee's performance
ivanzaharov [21]
It is and should be the managers job to do that
8 0
3 years ago
The use of slang creates which type of communication barrier?
Nadya [2.5K]

Answer:

letter A just my suggestion ☺️☺️

6 0
3 years ago
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