Determine market interest rate, Applied Statistics

Assignment Help:

The interest rate on the three year loan is 0.087. Whereas the interest rate on the two year loan is 0.085 as given in A. Suppose that the liquidity premium at t=1 is 0.002 and that at t=2 is 0.0025.

Calculate the one year interest rate expected (forward rate) at t=2.

The interest rate on the four year loan is 0.09. Whereas the interest rate on the three year loan is 0.087 as in B. Suppose that the liquidity premium at t=3 is 0.0028 and that at t=2 is 0.0025 as in B.

Calculate the one year interest rate expected(forward rate) at t=3

The interest rate on the five year loan is 0.092. Whereas the interest rate on the four year loan is 0.09 as in C. Suppose that the liquidity premium at t=4 is 0.003 and that at t=3 is 0.0028 as in C.

Calculate the one year interest rate expected(forward rate) at t=4 rate Liquidity premium
-------------------------------------------------------------------------------*
One year interest rate t=0 0.08 0

on the 2 year loan 0.085 0.002

on the 3 year loan 0.087 0.0025

on the 4 year loan 0.090 0.0028

on the 5 year loan 0.091 0.0030

A A zero coupon bond matures in 5 years. The market interest for the bond is 10%. What will be the price of the zero?

B. Suppose that the price of this zero is $700. What is the market interest rate implied here?


Related Discussions:- Determine market interest rate

Chi square test, who invented the chi square test and why? what is central ...

who invented the chi square test and why? what is central chi square and non central chi square test? what is distribution free statistics? what are the conditions when the chi squ

Normal probability plots, The Null Hypothesis - H0:  The random errors will...

The Null Hypothesis - H0:  The random errors will be normally distributed The Alternative Hypothesis - H1:  The random errors are not normally distributed Reject H0: when P-v

Redundancy analysis, In reduced rank regression (RRR), the dependent var...

In reduced rank regression (RRR), the dependent variables are first submitted to a PCA and the scores of the units are then used as dependent variables in a series of

Scatter diagram - correlation analysis, Scatter Diagram The first step ...

Scatter Diagram The first step in correlation analysis is to visualize the relationship. For each unit of observation in correlation analysis there is a pair of numerical value

Demand, A monopolist firm''s demand curve is given by P:100-2q. (a) Find it...

A monopolist firm''s demand curve is given by P:100-2q. (a) Find its marginal revenue function.

Calculate total surplus, When the number of farmers growing wheat in Russia...

When the number of farmers growing wheat in Russia increases, the increase in world supply lowers the world price of wheat. Draw an appropriate diagram to analyze how this chang

Regression, Regression line drawn as Y=C+1075x, when x was 2, and y was 239...

Regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual

ANOVA, Your company operates a machine shop, and, having heard you had expe...

Your company operates a machine shop, and, having heard you had experience in statistics and design of experiments, consulted you for your opinion on an experiment they want to run

Artificial neural network, Normal 0 false false false E...

Normal 0 false false false EN-US X-NONE X-NONE

Calculate mean and standard deviation, Select and generate your assignment ...

Select and generate your assignment portfolio. The S&P/ASX 200 index is comprised of several sub-indices, including the following: 0) XPJ: The S&P/ASX 200 A-REIT Index 1) XDJ

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