Answer the below questions. (a) What is the empirical evidence on the relationship between volatility and the
Question:
(a) What is the empirical evidence on the relationship between volatility and the level of interest rates?
(b) Explain whether the historical evidence supports the use of a normal model or a lognormal model.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 41% (12 reviews)
a Empirical evidence reviewed regarding the relationship between interestrate volatility and the level of rates suggests that the relationship is weak at interest rate levels below 10 However for rate...View the full answer
Answered By
Mugdha Sisodiya
My self Mugdha Sisodiya from Chhattisgarh India. I have completed my Bachelors degree in 2015 and My Master in Commerce degree in 2016. I am having expertise in Management, Cost and Finance Accounts. Further I have completed my Chartered Accountant and working as a Professional.
Since 2012 I am providing home tutions.
3.30+
2+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Corporate Finance questions
-
What is the empirical evidence on whether capital gains tax cuts lead to a permanent increase in capital gains realizations? What does this evidence imply for the prospects of lowering capital gains...
-
What would happen to the equilibrium level of interest rates if: A. Borrowing for home building increased? B. A new highway program gets under way? C. Foreign creditors lose confidence in the United...
-
What does the historical relationship between volatility and return tell us about investors attitude toward risk?
-
Canton Company makes two types of cell phones. Handy is a thin, pocket-size cell phone that is easy to carry around. Action is a palm-size phone convenient to hold while the user is talking. During...
-
Draw two overlapping circles to represent the shared variance between A (the treatment or group membership variable) and Y (the outcome variable). Now draw three overlapping circles to represent the...
-
Halifax Seafood makes 500 wooden packing boxes for fresh seafood per day, working in two 10-hour shifts. Due to increased demand, plant managers have decided to operate three 8-hour shifts instead....
-
Your firm uses a large parallel-plate capacitor to store energy, and you measure the electric field strength between the plates to determine the amount of energy stored. During a test run with a new...
-
Referring to the product structure diagram for product A determine: a. How many Ks are needed for each A. b. How many Es are needed for each A. c. The low-level code for itemE. 12)
-
11. The current in a metallic conductor is plotted against voltage at two different temperatures T and T2. Which is correct :- Current 2 (1) T Voltage (2) T
-
Suppose you are ready to invest in a small resort property. Two locations look promising: Nootka Resort in Victoria, British Columbia, and Critter Cove Resort in Nova Scotia. Each place has its...
-
Explain why in practice arbitrage-free models are typically used rather than equilibrium models.
-
Comment on the following statement: If an interest-rate model allows the possibility of negative interest rates, then it is not useful in practice.
-
Prepare entries in the general fund for the following transactions that represent outflows of financial resources to the city of Cedar Creek in 2018: 1. Vouchers are prepared for the following items...
-
A Special Revenue Fund expenditure of $40,000 was initially paid from and recorded in the General Fund. The General Fund is now being reimbursed. The General Fund should report a. revenues of...
-
In practice, how is any remaining fund balance of a completed Capital Projects Fund used? a. Frequently, a governing body will specify what shall be done with any remaining fund balance before the...
-
What method of accounting does GAAP require for inventories in an Internal Service Fund? a. Consumption method. b. Purchases method. c. Acquisition method. d. All of the above are acceptable...
-
Which method of cash flow reporting is used to report operating activities? a. Indirect method. b. Direct method. c. Either the indirect or direct method, depending on the method chosen for the...
-
The actuarially based charges to the General Fund from a Self-Insurance Internal Service Fund should be reported in the Internal Service Fund as a. transfers. b. revenues. c. special items. d....
-
Assuming that the histone octamer (shown in Figure 520) forms a cylinder 9 nm in diameter and 5 nm in height and that the human genome forms 32 million nucleosomes, what volume of the nucleus (6 m in...
-
Draw the appropriate control flow graph of the given pseudocode.Make sure to only use one number for blocks of code which are all sequential and when the first line is executed, all of those lines...
-
Consider two bonds, a 3-year bond paying an annual coupon of 5% and a 10-year bond also with an annual coupon of 5%. Both currently sell at face value. Now suppose interest rates rise to 10%. a. What...
-
Suppose that investors expect interest rates to fall sharply. Would you expect short-term bonds to offer higher or lower yields than long-term bonds?
-
The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity. Calculate the interest rate offered by each of these strips. Years to...
-
3. Prove that Sin2x = 2corr CSC x is an identity. 4. Determine the solutions to the equation tan x = 3 - 2tanx for 0 x 2 accurate to two decimal places. 5. A sine function has an amplitude of 3, a...
-
Accountability refers to what you need to feel accountable/ responsible/ answerable for pursuing your goal. Instructions: In the space provided, below, indicate how you will be accountable for...
-
What is the gross yearly income? 2. What is the gross monthly income using this pay rate?
Study smarter with the SolutionInn App