Calculate the one year interest rate, Applied Statistics

Assignment Help:

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.


Related Discussions:- Calculate the one year interest rate

Regression lines, Regression Lines It has already been discussed that t...

Regression Lines It has already been discussed that there are two regression lines and they show mutual relationship between two variable . The regression line Yon X gives   th

Iterative convergence of the method, You are given the differential equatio...

You are given the differential equation dy/dx = y' = f(x, y) with initial condition y(0 ) 1 = . The following numerical method is also given: where  f n = f( x n , y n )

Simple linear regression, For each of the following situations choose the s...

For each of the following situations choose the statistical model that you find to be the most appropriate. Justify your choice. a) We are interested in assessing the effects of

Practice-Based Evidence, how to analyzePractice-Based Evidence Back to the ...

how to analyzePractice-Based Evidence Back to the Future

Compute a correlation coefficient, A researcher was interested lowering the...

A researcher was interested lowering the high school dropout level in his county. He measured the reading level of students entering middle school (based on a standard test) and th

Applications of standard error, Applications of Standard Error   ...

Applications of Standard Error   Standard Error is used to test whether the difference between the sample statistic and the population parameter is significant or is d

Probability and expectation, Ten balls are put in 6 slots at random.Then ex...

Ten balls are put in 6 slots at random.Then expected total number of balls in the two extreme slots

Anova, how do you find if two way or one way

how do you find if two way or one way

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd