# Question

Suppose today is January 2, 2015, and investors expect the annual risk-free interest rates in 2019 and 2020 to be:

Year One-Year Rate (rRr)

2019 4.5%

2020 2.3

Currently, a four-year Treasury bond that matures on December 31, 2018 has an interest rate equal to 2.5 percent. What is the yield to maturity for Treasury bonds that mature at the end of (a) 2019 (a five-year bond) and (b) 2020 (a six-year bond)? Assume the bonds have no risks.

Year One-Year Rate (rRr)

2019 4.5%

2020 2.3

Currently, a four-year Treasury bond that matures on December 31, 2018 has an interest rate equal to 2.5 percent. What is the yield to maturity for Treasury bonds that mature at the end of (a) 2019 (a five-year bond) and (b) 2020 (a six-year bond)? Assume the bonds have no risks.

## Answer to relevant Questions

Following are the yields on selected Treasury securities: Maturity Yield 5 years 3.1% 6 years 2.9 7years 2.6 Using the expectations theory, compute ...Psyre Company reported NO1 equal to $150,000 this year. Examination of the company's balance sheet and income statement shows that the tax rate was 40 percent, the depreciation expense was $40,000, $120,000 was invested in ...The current risk-free rate of return, rRF, is 4 percent and the market risk pre-mium, RPM, is 5 percent. If the beta coefficient associated with a firm's stock is 2.0, what should be the stock's required rate of return? To find the present value of an uneven series of cash flows, you must find the PVs of the individual cash flows and then sum them. Annuity procedures can never be of use, even some of the cash flows constitute an annuity ...Hybrid Hydro Plants, Inc., which has a marginal tax rate equal to 34 percent, has preferred stock that pays a constant dividend equal to $15 per share. The stock currently sells for $125. If the company incurs a 3 plant ...Post your question

0