The yield curve indicates that the two-year interest rate will be a function of what variables? Include in your answer an explanation of how changes in these variables will affect the two-year interest rate.
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The yield curve indicates that the two-year interest rate will be a function of what variables?
Include in your answer an explanation of how changes in these variables will affect the two-year interest rate.
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Solved in 3 steps
- Explain what the yield curve is, what determines its shape, and how you can use the yield curve to help forecast future interest rates.What is the importance of knowing the yield to maturity? Isn't it enough to know the amount of interest you will be earning yearly?6-1 YIELD CURVES Assume that yields on U.S. Treasury securities were as follows: Term Rate 6 months 4.69% 1 year 5.49 2 years 5.66 З years 5.71 4 years 5.89 5 years 6.05 10 years 6.12 20 years 6.64 30 years 6.76
- Give an example on annual rate of return method and solve itWhat can you calculate with the Excel argument FV? Number of periods of time for a loan or investment. Interest rate. Future value of an investment based on a constant interest rate. The constant periodic payment required to pay off a loan or investment.Which investment criteria answers the question: "How quickly do we recover our investment, in nominal dollars?" A) net present value B) internal rate of return C) profitability index D) payback period
- When computing an interest or growth rate, the rate will increase the smaller the future value, holding present value and the number of periods constant. Is this true or false?What factors affect current market interest rate? Why does the slope of the yield curve provide an important clue to the direction of future short-term interest rates?Given the forward rate available to the company, discuss the factors that it should consider at the outset when deciding whether to fix the future interest rate. The word-count for this element should be 500-600 words.How do you solve for the rate of return using the yield to maturity formula?
- Which of these will increase the present value of an amount to be received sometime in the future? Group of answer choices Increase in the discount rate. Increase in the time until the amount is received. Decrease in the interest rate Decrease in the future valueDiscuss the meaning and significance of the perpetuity growth rate in the DCF Valuation and how you will go about forecasting itHow would I calculate the nominal interest rate that is used in the effective annual rate equation by hand without using a financial calculator?