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Suppose the real risk-free rate is 2.5%, the average future inflation rate is  1.7%, a maturity premium of 0.08% per year to maturity applies, i.e., MRP =  0.08%(t), where t is the years to maturity.  Suppose also that a liquidity premium  of 1% and a default risk premium of 0.4% applies to A-rated corporate bonds.   How much higher would the rate of return be on a 10-year A-rated corporate  bond than on a 5-year Treasury bond.  Here we assume that the pure  expectations theory is NOT valid.   

Currently, 3-year Treasury securities yield 6.7%, 7-year Treasury securities yield  6.9%, and 10-year Treasury securities yield 7.2%. If the expectations theory is  correct, what does the market expect will be the yield on 3-year Treasury securities seven years from today?

You observe the following yield curve for Treasury securities: Maturity             Yield 1 Year                1.50% 2 Years              2.60% 3 Years              3.50% 4 Years              4.00% 5 Years              4.80% Assume that the pure expectations hypothesis holds.  What does the market expect will be  the yield on 3-year securities, 2 year from today?

Keys Corporation’s 5-year bonds yield 8.6%, and 5-year T-bonds yield 6.9%. The real risk-free rate is r* =  2.5%, the inflation premium  for 5 years bonds is  IP = 4%, the default risk premium for Keys’ bonds is DRP = 0.3% versus  zero for T-bonds, and the maturity risk premium for all bonds is found with  the formula  MRP =  (t – 1)*0.1%, where t = number of years to maturity.  What  is the liquidity premium (LP) on Keys’ bonds?

You observe the following yield curve for Treasury securities: Maturity             Yield 1 Year                2.60% 2 Years              4.00% 3 Years              4.60% 4 Years              5.00% 5 Years              5.80% Assume that the pure expectations hypothesis holds.  What does the market expect will be  the yield on 3-year securities, 2 year from today?

A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:  $2.3 million Year 2:  $2.2 million Year 3:  $1.7 million Year 4:  $2.6 million Year 5:  $1.6 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate  a contract that has a present value of $3 million more than that which has been  offered.  Moreover, the player wants to receive his payments in the form of a 5-year  annuity due.  All cash flows are discounted at 12.1 percent.  If the team were   to agree to the player’s terms, what would be the player’s annual salary (in millions  of dollars)?

Jill currently has $431,861.00 in a brokerage account.  The account pays a  10.8 percent annual interest rate.  Assuming that Jill makes no additional  contributions to the account, how many years will it take for her to have $1,186,122.00 in the account?

A bank recently loaned you $19,609.00 to buy a car.  The loan is for 6 years  and is fully amortized.  The nominal rate on the loan is 6.9 percent, and payments are made at the end of each month.  What will be the remaining balance on the loan after you make payment number 31?

A. How is a series circuit different from a parallel circuit?   B. What are conductors and why are they important in a circuit?

Explain the difference between Active and Passive attachments. Then give an example of each by explaining how it would help you accomplish one of the missions on the RePLAY Game board. Click here for the mission list and descriptions.