Question: can you please help me understand this question? A 10-year US Treasury bond trades at a yield of 4%, while a 2-year US Treasury bond

can you please help me understand this question?

  • A 10-year US Treasury bond trades at a yield of 4%, while a 2-year US Treasury bond trades at a yield of 1.8%. What would be the primary cause of the yield difference between the two bonds?
  • A.Default-risk premium
  • B.Interest-rate risk premium
  • C.Liquidity premium
  • D.Government bond premium

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

According to the Canada PESTEL lecture, it is a political risk that the country's economy is closely tied to the ______ economy because _______. Group of answer choices US; Canada can't control the...

Q:

1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...

Q:

hello, can you please help me answer the questions attached. Attached is the case merger and sample write-up. Its be in Times New Roman 12-point font, double-spaced and 4 pages. Any supporting...

Q:

Can someone help me solve this test. When you answer the test, can you write the solution below the answer. TestId: 1001 For each problem, choose the answer choice that best answers the question....

Q:

1. A 10-year US treasury bond, issued on 1/14/2022, will expire on 1/14/2032. As of 7/1/2022, prior to the first coupon being paid, this bond is yielding 2.88% and is trading at a clean (or flat)...

Q:

Read the Harvard readings: 1. The Cost of Capital: Principles and Practice and 2. Estimating Walmarts Cost of Capital. Question 2A: Compute Cost of Debt in 2019 using method 1 and method 2 Method 1:...

Q:

Read the Harvard readings: 1. The Cost of Capital: Principles and Practice and 2. Estimating Walmarts Cost of Capital. Question 1: What is the cost of capital? Why do managers care about cost of...

Q:

i need a good 1 page summary of this without plagirism its about (( Warren buffetts letters to Berkshure shareholders in 2020)) BERKSHIRE HATHAWAY INC. To the Shareholders of Berkshire Hathaway Inc.:...

Q:

Instead of using the average interest rate in Method 1, use Walmarts 30-year bond yield rate that manager Lee provided below. You will use the after-tax cost of debt results from method 2 to estimate...

Q:

As the question (below) is already answered by way of analysis, can you please summarize the results in a one- page executive summary (or executive summary) of what was found in the analysis with two...

Q:

An insulated 0.15-m3 tank contains helium at 3 MPa and 130oC. A valve is now opened, allowing some helium to escape. The valve is closed when one-half of the initial mass has escaped. Determine the...

Q:

A geothermal pump is used to pump brine whose density is 1050 kg/m3 at a rate of 0.3 m3/s from a depth of 200 m, For a pump efficiency of 74 percent, determine the required power input to the pump....

Q:

HW Score: 7 5 % , 6 Question 7 , 2 . 3 . 1 5 of 8 points Points: 0 of 1 Differentiate. f ( x ) = l n ( x 6 - 2 x ) f ' ( x ) =

Q:

Once an organization has recruited candidates and they are going through the application process, how do they select the right employee? There are a number of tools and assessments that are used in...

Q:

Arthur Seth has a rice farmer for several years making up his accounts to December 31st each year. On 1st July, Bernice Aku joined the business Details of the partnership were as follows Capital...

Q:

The ABCD Partnership has the following balance sheet at January 1, 2017, prior to the admission of new partner, Eden. Cash and current assets ................................$39,000 Liabilities...

Q:

Analyze the factors which may impact the financial performance for Rakon Limited Company, and give some recommend that how to increasing the financial performance for Rakon Limited Company. Prepare a...

Q:

a) List the annual GST registration turnover threshold levels applicable to businesses/enterprises. General businesses Not for profits Taxi drivers b) Advise the annual turnover threshold rule to...

Q:

Determine if the overhead allocated to the product relates to a single plantwide overhead rate method, multiple production department factory overhead rate method, or activity-based costing...

Q:

6. A researcher carries out a t-test to analyse the differences between two conditions. She wishes to use a one-tailed hypothesis. The output from SPSS gives a two-tailed probability of 07. Which...

Q:

5. Levenes test shows whether: a) Scores from two independent groups have roughly equal variances b) Scores from one group of people performing in two conditions have equal variances c) Scores are...

Q:

Ten people with Chronic Fatigue Syndrome rated their fatigue on a scale of 15 at two time points, before and after lunch. Data is skewed. 7. This is a: a) Two-group independent design b) Two-group...