Calculate the expected market yields

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Reference no: EM131092736

Given the following data on debt U.S. Treasury debt instruments:

1-year note yield = 4.42%                       7-year note yield = 5.64%

2-year note yield = 4.69%                       8-year note yield = 5.70%

3-year note yield = 5.02%                       9-year note yield = 5.86%

4-year note yield = 5.02%                       10-year note yield = 5.95%

5-year note yield = 5.35%                       11-year note yield = 5.90%

6-year note yield = 5.50%                       12-year note yield = 5.99%

And constant premiums of 0, .17%, .41%, .63%, .82%, .98%, 1.12%, 1.22%, 1.30%, 1.37%, 1.42%, 1.45%, 1.47%

  1. Calculate the expected market yields for a (1,5,2) path. 
  2. Calculate the expectations yields for a (3,4,1) path.
  3. Calculate the real world yield for a (3,5) path
  4. Calculate the expected preferred habitat yield for a 5-year note purchased at the beginning of year 2.
  5. Calculate the expectations yield on a 4-year note purchased at the beginning of year 5. 
  6. Determine the expectations yield on a 10-year note purchased today.
  7. Determine the yield on a 12-year Treasury note purchased today. 
  8. Describe the yield curve and provide a general interpretation of what implies about the economy.

Reference no: EM131092736

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