Answer:2
Step-by-step explanation:
Maturity risk for 3 year Treasury security is 0.1%
<u>Explanation:</u>
Given -
Rate of 3 year Treasury security, R3 = 7%
Rate of 6 year Treasury security, R6 = 6.2%
Rate of inflation, Ri = 2.25% next year, 2.5% on 2nd year, 2.5% on 3rd year
Real interest rate, Rint = 4.4%
Maturity risk on 3 year Treasury security, x = ?
Maturity risk for 3 year Treasury security:
R3 = Ri on 3rd year + Rint + x
7% = 2.5% + 4.4% + x
x = 0.1%
Therefore, Maturity risk for 3 year Treasury security is 0.1%
The interior angles sum to 180°, so the missing angle has measure
180° - 106° - 12° = 62°
Use the law of sines to find RS:
sin(106°)/RS = sin(62°)/34 ⇒ RS = 34 sin(106°)/sin(62°) ≈ 37
Retail price would be $46.2 because,
10% of 42 is 4.2.
Meaning 42+4.2=46.2
or retail price.
