Question: Given the following data on debt U.S. Treasury debt instruments: 1-year note yield = 3.42% 7-year note yield = 4.64% 2-year note yield = 3.69%
Given the following data on debt U.S. Treasury debt instruments: 1-year note yield = 3.42% 7-year note yield = 4.64% 2-year note yield = 3.69% 8-year note yield = 4.70% 3-year note yield = 4.02% 9-year note yield = 4.86% 4-year note yield = 4.02% 10-year note yield = 4.95% 5-year note yield = 4.35% 11-year note yield = 4.90% 6-year note yield = 4.50% 12-year note yield = 4.99% And constant premiums of 0, .17%, .41%, .63%, .82%, .98%, 1.12%, 1.22%, 1.30%, 1.37%, 1.42%, 1.45%, 1.47% a. Calculate the expectations market yields for a (1,2,5) path. b. Calculate the expected market yields for a (3,4,1) path. c. Calculate the real world yield for a (5,3) path. d. Calculate the expected preferred habitat yield for a 5-year note purchased at the beginning of year 2. e. Calculate the expectations yield on a 4-year note purchased at the beginning of year 5. f. Determine the expectations yield on a 10-year note purchased today. g. Determine the yield on an 11-year Treasury note purchased today. h. Describe the yield curve and provide a general interpretation of what implies about the economy.
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