One-year Treasury securities yield 5.3%, 2-year Treasury sec…

One-year Treasury securities yield 5.3%, 2-year Treasury securities yield 5.8%,  and 3-year Treasury securities yield 5.7%. Assume that the expectations theory  holds. What does the market expect will be the yield on 1-year Treasury  securities two years from now?

The real risk-free rate of interest is 1 percent.  Inflation…

The real risk-free rate of interest is 1 percent.  Inflation is expected to be 5 percent this  coming year, jump to 6 percent next year, and increase to 7 percent the year after (Year 3).   According to the expectations theory, what should be the interest rate on 1-year, risk-free  securities today?

Suppose the real risk-free rate is 4%, the average future in…

Suppose the real risk-free rate is 4%, the average future inflation rate is  1.9%, a maturity premium of 0.05% per year to maturity applies, i.e., MRP =  0.05%(t), where t is the years to maturity.  Suppose also that a liquidity premium  of 0.7% and a default risk premium of 1% applies to A-rated corporate bonds.   How much higher would the rate of return be on a 9-year A-rated corporate  bond than on a 5-year Treasury bond.  Here we assume that the pure  expectations theory is NOT valid.   

Suppose the real risk-free rate is 3.6%, the average future…

Suppose the real risk-free rate is 3.6%, the average future inflation rate is  2.3%, a maturity premium of 0.06% per year to maturity applies, i.e., MRP =  0.06%(t), where t is the years to maturity.  Suppose also that a liquidity premium  of 0.7% and a default risk premium of 0.7% applies to A-rated corporate bonds.   How much higher would the rate of return be on a 7-year A-rated corporate  bond than on a 5-year Treasury bond.  Here we assume that the pure  expectations theory is NOT valid.