Calculate the one year interest rate, Applied Statistics

A.The coupon rate of Erie-Chicago Rail is 7%. The interest rate of Florida municipal bond with equal risk is 6%.  At what tax rate the two bonds are as good as each other

B.Suppose that the coupon rate of Eire-Chicago is r and the interest rate of Florida bond is i Let t be the tax rate. What is the formula to calculate the tax rate at which both bonds become precisely as good as each other?

Assume that you believe in the exact expectation theory.

A.The one year interest rate at t=0 is 0.03 now. The interest rate on the two year loan is 0.035. Calculate the one year interest rate expected(forward rate) at t=1.

B. Suppose further that the interest rate on the three year loan is 0.04. What will be the forecast of the one year interest rate expected(forward rate) at t=2?

C. Suppose futher that the interest rate of the four year loan is 0.043. What will be the forecast of the one year interest rate expected(forward rate) at  t=3?

D.Suppose further that the interest rate of the five year loan is 0.045. What will be the

forecast of the one year interest rate expected(forward rate) at t=4?

Assume that you believe in Mishikin's version of the liquidity premium theory.

A.The interest rate on the two year loan is 0.085 whereas that on one year loan is 0.08 at t=0. The liquidity premium on one year loan is 0 and the liquidity premium on two year  is 0.002.

Calculate the one year interest rate expected(forward rate) at t=1.

Posted Date: 3/2/2013 7:33:32 AM | Location : United States







Related Discussions:- Calculate the one year interest rate, Assignment Help, Ask Question on Calculate the one year interest rate, Get Answer, Expert's Help, Calculate the one year interest rate Discussions

Write discussion on Calculate the one year interest rate
Your posts are moderated
Related Questions
The mean tax-return preparation fee H&R Block charged retail customers in 2012 was $183 (The Wall Street Journal, March 7, 2012). Use this price as the population mean and assume t

Significance of Correlation The study of correlation is of immense use in practical life. Correlation analysis contributes to the understanding of economic behavior, aids in lo

PCA is a linear transformation that transforms the data to a new coordinate system such that the greatest variance by any projection of the data comes to lie on the first coordinat

Complete the multiple regression model using Y and your combined X variables.  State the equation.  Next, make sure that you evaluate overall model performance with the Anova table

Your employer, Quick Hit Agency (QHA), is a debt collections agency. The company specializes in collecting small accounts. QHA does not deal in large accounts and does not take on

Accelerated Failure Time Model A basic model for the data comprising of survival times, in which the explanatory variables measured on an individual are supposed to act multipli

how many types of ogive are there

Statistical Keys To do statistical operations we must first set the calculator on SD mode [SD stands for "standard deviation" which is the usual st

The investor has constant wealth 1 and is o?ered to invest in shares of a project that either gains 3=2 or loses 1 with equal probabilities. Therefore, if the investor obtains sha

In recent years a number of calculators are available for doing statistical calculations over and above the usual addition, subtraction, multiplication and division. The fx-82 mode