The Wall Street Journal Reports That the Current Rate on Five-Year

question 13

Multiple Choice

The Wall Street Journal reports that the current rate on five-year Treasury bonds is 6.45 percent and on 10-year Treasury bonds is 7.75 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a five-year Treasury bond purchased five years from today, E(₅r₅) .

• A) 7.25 percent
• B) 8.12 percent
• C) 9.07 percent
• D) 10.16 percent

---

Definitions:

Feasible Solution

A potential solution to a problem that meets all the constraints and requirements specified in the problem's definition.

Improvement Indices

Metrics or measures used to quantify the level of improvement or progress in various aspects such as productivity, quality, or efficiency within an organization or system.

Northwest-Corner Rule

A method used in transportation problems of linear programming to find a basic feasible solution by starting at the northwest corner of a cost matrix and allocating supplies to demands while moving south and east through the matrix.