Plot the expected real interest rate since 1979 by subtracting the Michigan survey inflation measure (FRED code: MICH) from the three-month Treasury bill rate (FRED code: TB3MS). Plot as a second line the ex post or realized real interest rate by subtracting from the three-month Treasury bill rate (FRED code: TB3MS) the actual inflation rate based on the percent change from a year ago of the consumer price index (FRED code: CPIAUCSL). What does it mean when these two measures are different?
Answer to relevant QuestionsConsider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with probability ⅔. a. Construct a table of the possibilities and probabilities in ...For each of the following events, explain whether it represents systematic risk or idiosyncratic risk and explain why. a. Your favorite restaurant is closed by the county health department.b. The government of Spain defaults ...Give an example of systematic risk for the U.S. economy and how you might reduce your exposure to such a risk.Another way to understand stock market risk is to examine how investors expect risk to evolve in the near future. The DJIA volatility index (FRED code: VXDCLS) is one such measure. Plot the level of this volatility index ...In a recent issue of the Wall Street Journal (or on www.wsj.com or an equivalent financial Website), locate the prices and yields on U.S. Treasury issues. For one bond selling above par and one selling below par (assuming ...
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