One-year Treasury securities yield 4%. The market anticipates that 1-year from now 1-year Treasury securities will yield 2.1%. If the pure expectations theory is correct, what should be the yield today for 2-year Treasury securities? Write your answer as a percentage, i.e. for example write 8% as 8.

Answers

Answer 1

Answer:

3.05%

Explanation:

According to Pure Expectation Theory, the future short term interest rates are actually the forward rates.

Mathematically,

(1 + r2,0)^2 = (1 + r1,0)^1 * (1 + r1,1)^1

Here,

r2,0 is the rate of interest for 2 year treasury security from today

r1,0 is the rate of the interest for 1 year treasury security from today

r1,1 is the rate of the interest for 2 year treasury security from Year 1

By Putting Values, we have:

(1 + r2,0)^2 = (1 + 0.04)^1 * (1 + 0.021)^1

(1 + r2,0)^2 = 1.06184

By taking square-root on both sides, we have:

(1 + r2,0) = 1.0305

r2,0 = 3.05%


Related Questions

Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition is known as:

Answers

Answer: Value proposition

Explanation: Value proposition in business is that service, innovation, or uniqueness about your business that attracts customers. A value proposition also helps answers the question 'why' someone should do business with you. It hells to convince potential customer why they should patronize you, and why your service or product would be of more value to them than what your competitors offering same service would be able to offer them.

Which of the following is a community lifeline

Answers

Answer:

Safety and security

food, water, and shelter

health and medical

power and fuel

communications and transport

Explanation:

A lifeline allows business and government structures to continue to operate and is beneficial to human health and financial stability. Lifelines are perhaps the most important resources in the community that allow all other facets of society to work when balanced. The interconnected network of resources, services, and securities ( food, water, and shelter, medical care, communications facilities, etc) that provide lifeline services is used on a daily basis to facilitate the community's regularly occurring needs and give all other elements of society to perform efficiently.

Communications are the Community's lifeline. Safety and security, health and medical care, communications, hazardous materials, food, water, shelter, energy (power & fuel), and transportation are the seven community lifelines that FEMA has defined. Thus, option C is correct.

The Community Lifelines idea from the Federal Emergency Management Agency (FEMA) is a framework for event management that gives emergency managers a reporting system to swiftly stabilize a community after a disaster.

Safety and security, health and medical care, communications, hazardous materials, food, water, shelter, energy (power & fuel), and transportation are the seven community lifelines that FEMA has defined. It is a sign that lives are in danger, and daily routines and food chains are disturbed, if any of these Lifelines go down due to a disaster or emergency.

Learn more about FEMA community lifelines here:

https://brainly.com/question/16931841

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Your question seems to be incomplete, but most probably the complete question was:

Which of the following is a community lifeline?

a. schools and churches

b. lumber and hardware

c. grocery and fast food

d. communications

All projects are unique:________.
Select one:
A. Therefore all project management circumstances are equally unique.
B. So knowledge should not be transferred to avoid bias in future projects.
C. So knowledge cannot be transferred.
D. But they may have several common points.

Answers

Answer:

D. But they may have several common points

Explanation:

Although all projects are unique, they still share similar similarities. So knowledge can be transferred.

Jayne Butterfield, a single mother with three children, lived in Sacramento, California. Sarah Huckleberry also lived in California until she moved to New York City to open and operate an art gallery. Huckleberry asked Butterfield to manage the gallery under a one-year contract for an annual salary of $90,000. To begin work, Butterfield relocated to New York. As part of the move, Butterfield transferred custody of her children to her husband, who lived in London, England. In accepting the job, Butterfield also forfeited her husband's alimony and child-support payments, including unpaid amounts of nearly $45,000. Before Butterfield started work, Huckleberry repudiated the contract. Unable to find employment for more than an annual salary of $30,000, Butterfield moved to London to be near her children. She filed a suit in an California state court against Huckleberry, seeking damages for breach of contract. Should the court hold, as Huckleberry argued, that Butterfield did not take reasonable steps to mitigate her damages? Why or why not?

Answers

Answer:

No, the court should not hold in favor of Huckleberry.

Explanation:

The rule of mitigation that Huckleberry tries to use in her favor states that the non-breaching party (Butterfield) should have taken all the necessary steps to reduce her loss, e.g. take a job in New York. She probably argued that Butterfield leaving for England to meet with her children made things worse.

But in this case, Butterfield relied on Huckleberry's promise to organize her life and the well being of her children. Butterfield made a lot of changes and sacrifices in her life because of this, e.g. forfeiting unpaid alimony, transferring custody of her children , etc.

Moving to a different city or country requires a lot of work, expat life is not easy and not everyone can handle it. Butterfield took decisions that affected the lives of many people and she is not responsible for Huckleberry's breaching, the only party responsible for all this mess is Huckleberry and it is normal that Butterfield would want to go to where her children are.

Record adjusting journal entries 100 of the following for year ended December 31
Assume no other adjusting entries are made during the year

Salaries Payable.: At year-end, salaries expense of $24,000 has been incurred by the company, but is not yet paid to employees.
Interest Payable: At its December 31 year-end, the company owes $675 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.
Interest Payable: At its December 31 year-end, the company holds a mortgage payable that has incurred $1,300 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.

Answers

Answer:

Salaries Payable :

Salaries Expense $24,000 (debit)

Salaries Payable $24,000 (credit)

Interest Payable:

Interest Expense $675 (debit)

Interest Payable $675 (credit)

Interest Payable:

Interest Expense $1,300 (debit)

Interest Payable $1,300 (credit)

Explanation:

When an amount is incurred but is deferred to another period for payment, a liability is recognized.

A liability is a present legal obligation arising from a past event, the settlement of which will result in outflow of economic benefits (Cash) from the entity.

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