The risk and term structure of interest rates, Macroeconomics

The Risk and Term Structure of Interest Rates

Expectations Theory and Bond Maturity Level Analysis Prepare calculations and a one to two page analysis, following the APA 6th edition guidelines, that addresses the following:
Assuming that the expectations theory is the correct theory of the term structure, (1)calculate the interest rates in the term structure for maturity. Next, (2)plot the resulting yield curves for the following series of one-year interest rates over the next five years using both a and b.

a. 5%, 7%, 7%, 7%, 7%
b. 5%, 4%, 4%,4%,4%

Lastly, (3)interpolate how your yield curves would change if people preferred shorter-term bonds over long-term bonds. (4)Disclose what the book suggests once the short-term rate is much cheaper than the long-term in interest rate. (5)Substantiate whether or not that is a normal occurrence or a cause for alarm.

Posted Date: 3/25/2013 5:46:03 AM | Location : United States







Related Discussions:- The risk and term structure of interest rates, Assignment Help, Ask Question on The risk and term structure of interest rates, Get Answer, Expert's Help, The risk and term structure of interest rates Discussions

Write discussion on The risk and term structure of interest rates
Your posts are moderated
Related Questions
According to Bowen, Leamer, and Sveikauskas, which of the following is true? a. A nation indirectly exports its most abundant factors of production. b. A nation indirectly im

Using the PPC show what is meant by the law of increasing opportunity cost and explain (state) why that law exists. Why is that law important when deciding whether or not to watch

Discuss about real verses nominal gross domestic product. Real verses Nominal Gross Domestic Product: Real Gross Domestic Product: the value of the concluding goods and se


why is imports subtracted from the expenditure approach

Why are Economic Models uses for Trade-offs and Trade? Simplified representations of actuality a. production possibility frontier b. comparative advantage c. circular-

I want a Fiscal policy in the School of rational expectations.

Discretionary fiscal policy will stabilize the economy most when: A.) deficits are incurred during recessions and surpluses during inflations B.) the budget is balanced each year C

The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, redu

Until recently you worked as an accountant, earning $30,000 annually. Then you inherited a piece of commercial real estate bringing in $12,000 in rent annually. You decided to leav