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- Give typing answer with explanation and conclusion "One-year Treasury bills currently earn 2.35% and you expect that one year from now, 1-year Treasury bill rates will increase to 2.61% and that two years from now, one-year Treasury bill rates will increase to 3.11%; If the unbiased expectations theory is correct, what should the current rate be on a three-year Treasury security?" one year is 14.6% what is it in decimal formTyson Inc. wants to hedge an account receivable of ¥595 million to be received in six months using a money market hedge. Given a yen borrowing rate of 6% APR and a spot exchange rate of ¥119/$ how much is the yen denominated loan Tyson Inc. will need to borrow today worth when converted into dollars? Question 6 options: $4,926,108 $4,716,981 $5,000,000 $4,854,369If inflation is anticipated to be 6 percent during the next year, while the real rate of interest for one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan? a. 11% b. 6%c. 5%d. 12%
- A 1 year government treasury bill will pay you $1,000 when it matures 1 year from now (no interest/coupon payments). If the going interest rate on a 1 year T- Bill is 0.75% what would you be willing to pay for the investment today? Question 2Answer a. $992.56 b. $571.43 c. $999.93 d. $1,333.336. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on car loans is 11% per year, and both actual and expected inflation are equal to 4%. Complete the first row of the table by filling in the expected real interest rate and the actual real interest rate before any change in the money supply. Time Period Nominal Interest Rate Expected Inflation Actual Inflation Expected Real Interest Rate Actual Real Interest Rate (Percent) (Percent) (Percent) (Percent) (Percent) Before increase in MS 11 4 4 Immediately after increase in MS 11 4 6 Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 4% to 6% per year. Complete the second row of the table by filling in the expected and actual real interest rates on car loans immediately after the increase in the money supply (MS). The unanticipated change in inflation…28. Consider a bank dealer who faces the following spot rates and interest rates. What should he set his 1- year forward ask price at? Bid So(S/E) S1.42 = €1.00 F360(S/E) A. $1.4324/€ B. $1.4358/€ C. $1.4662/€ D. $1.4676/€ Ask $1.45 = €1.00 Borrowing 4.25% APR is je 3.10% APR Lending 4% APR 3% APR
- a If current interest rate is 28%, a Treasury Bill with 91 days to maturity, and a face value of GH¢ 50,000 should have a market value of? o Assuming you bought a 182-day Treasury Bill with a face value GH¢20,000.00 and held it for 45 days. If you want to sell it and interest rate is currently at 25%, at what price will you sell it?6. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on car loans is 12% per year, and both actual and expected inflation are equal to 3%. Complete the first row of the table by filling in the expected real interest rate and the actual real interest rate before any change in the money supply. Nominal Interest Expected Actual Expected Real Interest Actual Real Interest Rate Inflation Inflation Rate Rate Time Period (Percent) (Percent) (Percent) (Percent) (Percent) Before increase in MS 12 Immediately after increase 12 3 8. in MS Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 3% to 8% per year. Complete the second row of the table by filling in the expected and actual real interest rates on car loans immediately after the increase in the money supply (MS). The unanticipated change in inflation arbitrarily harms Now consider the long-run impact of the change in…Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.45% at a time when infialion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessay.) Il banks expect that the rate of inflation in the coming year will be 3.9% and they want a real return of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) 11 the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. creditors (people or institutions that are owed money). O B. deblors (pcople or businesses who owe moncy). OC. both would benefit cgqually O D. neilher bencfits.
- vvk.5 The real risk-free rate is 4%. Inflation is expected to be 2% this year, 3% next year, and then 4.5% thereafter. The maturity risk premium is estimated to be 0.0006 \times (t - 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security? Do not round intermediate calculations. Round your answer to two decimal places. %1. Calculate profit of the bank if you know that: a. You accept deposit 1000 b. Obligatory reserve rate = 20% %3D c. Rate for deposit = 10% d. You invest as much as you can in bonds which have present value 80 and will be bought by 100 in year from nowA2 You are considering investing $10,000 in either U.S. Treasury bills or bank certificates-of-deposits (CDs). Suppose 6-month U.S. Treasury bills and 6-month bank CDs are both yielding 4.50% annually. Both investments are considered “default-risk free.” Which investment should you probably select. Briefly explain.