Not register? Register Now!
Essay Available:
Pages:
3 pages/≈825 words
Sources:
2 Sources
Level:
APA
Subject:
Mathematics & Economics
Type:
Math Problem
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
\$ 12.96
Topic:

# Inflation and Interest Rates, Real Risk-Free Rate (Math Problem Sample)

Instructions:

source..
Content:

Inflation and Interest Rates
Name
Institution
Date
Problem 1: Real Risk-Free Rate
Current 30-day T-bills are yielding 3.5 percent. Your accountant provided you with these interest rate premiums:
IP = 1.5%
LP = 0.6%
MRP = 1.8%
DFP = 2.15%
What is the real risk-free rate of return based on this data?
r = r* + IP
3.5%= r* +1.5%
r*=2%
Problem 2: Expected Interest Rate
For this problem, examine Treasury securities. Considering the following numbers, what would the yield on 3-year Treasury securities be?
Real risk-free = 4%.
Inflation expected at 1.5% for this year and 2% for the next 2 years.
r = r* + IP + MRP + DRP + LP
r=4 %.+[( 1.5) +2%*2)]/3= 5.83%
The interest rate serves as the starting point when examining the rates of investments, and the interest rate represents the probability th

...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

### Other Topics:

• Defining the Different Kinds of Sampling Methods
Description: Of all the sampling methodologies, simple random sampling is one of the most commonly used because it is easy to implement and analyze...
4 pages/≈1100 words | No Sources | APA | Mathematics & Economics | Math Problem |
• MAT101 Case: Expressions and Equations
Description: Complete the following problems using the SLP 1 Answer Template...
10 pages/≈2750 words | No Sources | APA | Mathematics & Economics | Math Problem |
• Math Problem: Effect of Outlier Value on Mean and Median
Description: Choose a continuous variable that is normally distributed (for example, height) and create a hypothetical data set with 30 values showing the distribution....
1 page/≈275 words | No Sources | APA | Mathematics & Economics | Math Problem |
Need a Plagiarism Free Essay?