Determinants of Interest Rates for Individual Securities the Wall Street

question 47

Multiple Choice

Determinants of Interest Rates for Individual Securities The Wall Street Journal reports that the current rate on five-year Treasury bonds is 2.85 percent and on 10-year Treasury bonds is 4.35 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)3.60 percent
• B)5.85 percent
• C)7.20 percent
• D)8.28 percent

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