The price of a 3-year zero coupon government bond is 85.16. The price of a similar 4-year

Fantastic news! We've Found the answer you've been seeking!

Question:

The price of a 3-year zero coupon government bond is 85.16. The price of a similar 4-year bond is 78.81. What is the 1-year implied forward rate from year 3 to year 4?

A) 4.6%

B) 5.5%

C) 5.8%

D) 6.7%

Related Book For answer-question

Principles of economics

ISBN: 978-0538453042

6th Edition

Authors: N. Gregory Mankiw

See More Books

Posted Date: Jan 20, 2021 01:47 PM

See More Questions

What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?
Price Mart reduces the price of a 42 inch TV Plasma from $1,200 to $1,000. As a result sales of TV Plasmas increased from 30 units a month to 42 units a month. Calculate the price elasticity of...
What two basic factors drive the price of a stock? What is the first step in the valuation process for a stock? What are you trying to determine through
1. Give the format of HTTP request message. 2. Give the format of HTTP response message.
What does it mean if the expenditure weights of the market basket used to compute the CPI are changed?
(a) What is the average value of a function f on an interval [a, b]? (b) What does the Mean Value Theorem for Integrals say? What is its geometric interpretation?
CGI Federal, Inc., is a corporation that provides a number of services to the United States Passport Agency, included the processing of passport application. Passport applicants must submit sensitive...
Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: The companys discount rate is 18%. Required:...
1. A ray of light enters glass (index 1.570) from air at an incident angle of 25. Find the angles of refraction and of deviation. 2. A light ray is directed through air (index 1.000) at a 25 angle of...
Lido Company's standard and actual costs per unit for the most recent period, during which 400 units were actually produced, are given below: Standard Actual Materials: Standard: 2 foot at $1.50 per...
Alex and Addison are married and have the following income items: Alex's salary Addison's Schedule C net profit Interest income $ 64,750 45,200 2,500 Addison's self-employment tax was $6,387....
As you might know, during 2021 we faced a major issue in our Operations/Supply Chain: Global Supply Chain collapse that affected several industries and customers Questions that need to be answered 1....
Submit a draft of Section I (Introduction) based on the strategic plan of the agency. Note that you will be writing about the Acme Health Care Agency PDF This draft should be as detailed as possible...
Which is the image of following mapping? 2 0-5 4 3 7
Every organization should develop a portfolio management framework that fits its business and includes the following elements: 1. a project review board, 2. structured, consistent collection and...
What is reframing meaning in after the game the king and the pawn go into the same box?
How can Shruti make sure the Estimates vs. Actuals tile (and report) reflect the estimated costs and income? Select all that apply. Change the status of the estimate to Accepted or Closed Change the...
Outline some of the major problems confronting an international advertiser.
Why is a monopolists marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain.
Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each companys profit depends on whether Little Kona enters and whether Big Brew sets a high price or...
Imagine that you are a policymaker trying to decide whether to reduce the rate of inflation. To make an intelligent decision, what would you need to know about inflation, unemployment, and the...
You are working at the campus bookstore earning $9.00 per hour. Your manager tells you that in the upcoming year you will get a 2% raise. How does your real wage change if inflation next year is 1%,...
In 2018, the federal government spent $4.1 trillion and brought in revenue of $3.3 trillion. a. Is this a budget deficit or surplus, and what is its size? b. If net government debt in 2018 was $15.8...
What are some advantages and disadvantages of technological innovation?

The price of a 3-year zero coupon government bond is 85.16. The price of a similar 4-year

Question:

Expert Answer:

671 Forward rate of interest from year 3 to 4 is calculated as fol... View the full answer

Principles of economics

Students also viewed these finance questions