Question: explain it please this is question 8 From Question 8, if an investor belleves that the short-term interest rate one year from now is 1.8%
this is question 8From Question 8, if an investor belleves that the short-term interest rate one year from now is 1.8% and has the following two options: Option A: 1 2-year investment, one investment with a maturity of two years Option B: 21 -year investments, two investments with a maturity of one year Which option is better? Explain. Given the following interest rates: tR1=1.1%=0.011tR2=1.4%=0.014tR3=1.9%=0.019tR4=2.4%=0.024 a. Calculate the short-term interest rate one year from now. [10 points] b. Calculate the short-term interest rate two years from now. [10 points] c. What is the interest rate on a two-year investment? [4 points]
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
