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Reika [66]
3 years ago
12

Assume that the current interest rate on a one-year bond is 8 percent, the current rate on a two-year bond is 10 percent, and th

e current rate on a three-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the one-year interest rate expected during Year 3? (Base your answer on an arithmetic average rather than a geometric average.)
Business
1 answer:
dimulka [17.4K]3 years ago
4 0

Answer:

16%

Explanation:

Given that,

Current interest rate on a one-year bond = 8 percent

Current rate on a two-year bond = 10 percent

Current rate on a three-year bond = 12 percent

One-year interest rate expected during Year 3:

= Current rate on a three-year bond - Current rate on a two-year bond

= (3 × 12%) - (2 × 10%)

= 36% - 20%

= 16%

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4 years ago
Sonja is writing an essay about becoming a preschool teacher. Complete it by correctly filling in the missing information.
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Answer:

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I’ll need to complete high school and get an <em>associate's degree (or bachelor's)</em>

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The occupation of a preschool teacher is in the <em>Human Services career cluster</em>. This cluster includes children education, social and community occupations and counseling.

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7 0
4 years ago
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Medlock Company sold inventory on credit for $3,000, terms 2/10, n/30. The cost of the merchandise to Medlock was $2,400. How mu
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Answer:

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Credit terms of 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

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4 years ago
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