Determinants of Interest Rates for Individual Securities the Wall Street

question 54

Multiple Choice

Determinants of Interest Rates for Individual Securities The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 3.25 percent and on 20-year Treasury bonds is 5.50 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a 10-year Treasury bond purchased ten years from today, E(₁₀r₁₀) .

• A)2.25 percent
• B)4.38 percent
• C)7.80 percent
• D)8.75 percent

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Definitions:

Cerebellum

A part of the brain at the back of the skull in vertebrates, which coordinates and regulates muscular activity.

Hippocampus

A structure within the brain critical for the formation of new memories and associated with learning and emotions.

Basal Ganglia

A group of nuclei in the brain involved in controlling movement and coordination, as well as playing a role in learning, emotional response, and habit formation.

Cerebellum

A region of the brain that plays a vital role in motor control, and may also be involved in some cognitive functions like attention and language.