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

Evaluate central tendency and variability, Why are graphs and tables useful...

Why are graphs and tables useful when examining data? A researcher is comparing two middle school 7th grade classes. One class at one school has participated in an arts program

Inference on reggression analysis, find the expected value of the mean squa...

find the expected value of the mean square error and of the mean square reggression

Calculate the line of best fit, The manager of Pizza Hut provides a deliver...

The manager of Pizza Hut provides a delivery service for customers who telephone in an order. The manager would like to give callers an idea of the time it will take to deliver an

Type i and ii errors, TYPE I AND II Errors If a statistical hypothesis ...

TYPE I AND II Errors If a statistical hypothesis is tested, we may get the following four possible cases: The null hypothesis is true and it is accepted; The

Sdsad, Ask questionsadsadsadsadas#Minimum 100 words accepted#

Ask questionsadsadsadsadas#Minimum 100 words accepted#

Time series, Measurement of trend , least square method

Measurement of trend , least square method

Latin Square design, what is the the Latin Square design? What is its appli...

what is the the Latin Square design? What is its application in research? please explain this term with very simple but with detailed explanation for effective understanding. I hav

What are the hypotheses, Assume that a simple random sample has been select...

Assume that a simple random sample has been selected from a normally distribute population and test the given claim. Identify the null and alternative hypotheses, test statistic,

Find the optimal order quantity, The Maju Supermarket stocks Munchies Cerea...

The Maju Supermarket stocks Munchies Cereal. Demand for Munchies is 4,000 boxes per year and the super market is open throughout the year. Each box costs $4 and it costs the store

Expected average time, Question: A car was machine washes each car in 5 min...

Question: A car was machine washes each car in 5 minutes exactly. It has been estimated that customers will arrive according to a Poisson distribution at an average of 8 per hour.

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