Warm-Up Exercises

All problems are available in MyLab Finance.

  1. Learning Goal 1

    E6–1 The nominal, risk-free rate on T-bills is 1.23%. If the real rate of interest is 0.80%, what is the expected inflation rate?

  2. Learning Goal 1

    E6–2 The yields for Treasuries with differing maturities on a recent day were as shown in the table below.

    Maturity Yield
    3 months 1.41%
    6 months 1.71   
    2 years 2.68   
    3 years 3.01   
    5 years 3.70   
    10 years 4.51   
    30 years 5.25   
    1. Use the information to plot a yield curve for this date.

    2. If the expectations hypothesis is true, approximately what rate of return do investors expect a 5-year Treasury note to pay 5 years from now?

    3. If the expectations hypothesis is true, approximately what rate of return ...

Get Principles of Managerial Finance, 15th Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.