An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this investment will be only 7.4 percent. What does Alex believe the inflation rate will be over the next year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

. Evaluate the following statement:Consider two riskless perpetuities: (i) pays $120 every year; (ii) pays $10 every month. If the rates of returns of the two perpetuities are the same, investors must buy perpetuity (ii) because it makes more interest payments.

The one-year spot rate is currently 4%; the one-year spot rate one year from now will be 3%; and the one- year spot rate two years from now will be 6%. Under the unbiased expectations theory, what must today's three-year spot rate be? Suppose the three-year spot rate is actually 3.75%, how could you take advantage of this? Explain.

The current one-year T-bill rate is .50 percent and the expected one-year rate 12 months from now is 1.38 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))   Current rate=    %

Raghubhai

Yogesh

At present, the real risk free rate of interest is 0.020 while inflation is expected to be 0.020 for the next 2 years. If a 2 year Treasure Note vields 0.047. What is the Maturity Risk Premium for this 2 ear Treasury Note? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) Assume the expected inflation rate to be 0.034. If the current current real rate of Iinterest is 0.065. What would the nominal rate of interest be? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) At present, 10 year Treasury Bonds are yielding 0.039. while a 10 year Corporate Bond is yielding 0.066. If the liquidity risk premium on the corporate bond is 0.003. What is the Corporate Bonds Default Risk Premium?ANSWER IN DECIMAL NUMBERS ONLY TO 3 PLACES (AS SHOWN IN THE You are considering an investment that you expect will return an 0.089 return next year and you expect your real rate of return will be 0.125. What do you expect inflation to be next vear?GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES)

At present, the real risk free rate of interest is 0.020 while inflation is expected to be 0.020 for the next 2 years. If a 2 year Treasure Note vields 0.045. What is the Maturity Risk Premium for this 2 ear Treasury Note? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) Assume the expected inflation rate to be 0.040. If the current current real rate of Iinterest is 0.083. What would the nominal rate of interest be? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) At present, 10 year Treasury Bonds are yielding 0.039. while a 10 year Corporate Bond is yielding 0.066. If the liquidity risk premium on the corporate bond is 0.003. What is the Corporate Bonds Default Risk Premium?ANSWER IN DECIMAL NUMBERS ONLY TO 3 PLACES (AS SHOWN IN THE You are considering an investment that you expect will return an 0.038 return next year and you expect your real rate of return will be 0.69. What do you expect inflation to be next vear?GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES)

Joan, the project manager, asks you to evaluate alternatives A and B on the basis of their PW values using a real interest rate of 10% per year and an inflation rate of 3% per year (a) without any adjustment for inflation, and (b) with inflation considered. Also, write the spreadsheet functions that will display the correct PW values. (c) Joan clearly wants alternative A to be selected. If inflation is steady at 3% per year, what real return i would machine A have to generate each year to make the choice between A and B indifferent? What is the required return with inflation considered? Machine A B First cost, $ −31,000 −48,000 AOC, $ per year −28,000 −19,000 Salvage, $ 5,000 7,000 Life, years 5 5

Please show working.    Please answer 1 and 2   1. The real risk-free rate is 2.75%, and inflation is expected to be 4.00% for the next 2 years. A 2-year Treasury security yields 8.25%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places.   2. The real risk-free rate is 2.9%. Inflation is expected to be 2.2% this year, 4.8% next year, and 2.65% thereafter. The maturity risk premium is estimated to be 0.05 × (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round intermediate calculations. Round your answer to two decimal places.