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Author Question: Suppose the current one-year interest rate is 4. Also assume that financial markets expect the ... (Read 79 times)

SO00

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on: Jun 30, 2018
Suppose the current one-year interest rate is 4. Also assume that financial markets expect the one-year interest rate next year to be 5, and expect the one-year rate to be 6 the year after that. Given this information, the yield to maturity on a three-year bond will be approximately
 
  A) 4.
  B) 5.
  C) 6.
  D) 15.

Question 2

Which of the following events will cause the interest rate to increase?
 
  A) an open market sale of bonds
  B) an increase in the reserve deposit ratio (i.e., )
  C) an increase in income
  D) all of the above


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ryhom

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Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

D


SO00

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

sailorcrescent

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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