Suppose we observe the following rates: 1R₁ = 6.2%, 1R2 = 7.1%, and E(21) = 6.2%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2? (Round your intermediate calculations to 5 decimal places and final percentage answer to 2 decimal places. (e.g., 32.16)) Liquidity premium for year 2 %

Consider the following data related to rates and inflation: denotes the real rate of return: 5% the expected rate of inflation: 4% The Fisher effect as expressed in an approximate form points to a nominal rate of interest of _____________, while the precise formula results in a nominal interest rate of _______________ Question 27 options: Approximate 9.00% Precise 8.80% Approximate 9.20% Precise 10.12% Approximate 9.20% Precise 9.00% Approximate 9.00% Precise 9.20%

Suppose that the current one-year rate (one- year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1=6%, E(2r1) =7%, E(3r1) =7.5% E(4r1)=7.85% 1 Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. Show your answers in percentage form to 3 decimal places.

The risk-free interest rate is 4.1% per year, the liquidity premium is 0.5% per year, the maturity premium is 0.7% per year, the inflation premium is 2.2% per year, and the default premium is 2.7% per year. What is the annual real interest rate? 1) 1.9% 2) 1.5% 3) 2.3% 4) 2.1% 5) 1.7%

If the one-year and two-year interest rates are 6.5% and 7% respectively, what should be the forward rate for year 2 (according to the expectations theory)? 7% 7.5% 7.75% 7.25% 6.75%. 6.5%

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The following data are gathered:·       The real risk-free rate is 1.05%·       Inflation premium is constant at 2.60%·       Default risk premium is 3.50%·       Maturity risk premium is 2.30%·       Liquidity risk premium is 1.50%What is the risk free rate?

Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, and four years based on the following data. Note: Input your answers as a percent rounded to 2 decimal places. 1-year T-bill at beginning of year 1 1-year T-bill at beginning of year 21 1-year T-bill at beginning of year 3 1-year T-bill at beginning of year 4 2-year security 3-year security 4-year security Expected Return % % % Interest Rate 7% 9% 10% 12%

Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 2.00% per year. What is the real risk-free rate of return, r*? The cross-product term should be considered , i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)

The maturity risk premium for Vonda bonds are 3%, default risk premium for Vonda bonds are 4%, and the liquidity risk premium for Vonda bonds are 2%. The real rate of return is 3% and the inflation premium is 3%. What is the nominal rate of return?