Six months T-bills have a nominal rate of 7%, while default

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• If interest rate parity holds, what is the 6-m forward rate

  197030 Six-month T-Bills have a nominal rate of 7%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market, 1 yen equals $0.009.

• Interest rate parity

  199461 Interest rate parity: 6-month forward exchange rate of T-bills to Japanese bonds Six-month t-bills have a nominal rate of 7 percent, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5 percent.

• Calculate the 6-Month Forward Exchange Rate Based on the Nominal Interest Rates on Bonds

  176704 Calculate the 6-Month Forward Exchange Rate Based on the Nominal Interest Rates on Bonds Six-Month T-Bills have a nominal rate of 7 %, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5%.

• Interest Rate & Purchasing Power Parity

  176472 Interest Rate & Purchasing Power Parity 1. Interest Rate Parity Six month T-bills have a nominal rate of 7%, while default free Japanese bonds that mature in 6 months have a nominal rate of 55%.

• Interest rate parity with Japan for forward exchange rate

  220791 Interest rate parity with Japan for forward exchange rate; currency conversions Interest rate parity: Six-month T-bills have a nominal rate of 7 percent, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5 percent

• Exchange Rates and Purchasing Power Parity

  P19-3: INTEREST RATE PARITY Six-month T-bills have a nominal rate of 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 2.5%. In the spot exchange market, 1 yen equals $0.013.

• Long term T-bonds and risk free rate for T-bills

  Nominal = k* + IP + DP + LP + MRP Nominal = 4% + 7% + 0 + 0 + 0 = 11% for T-Bills Nominal = 4% + 7% + 0 + 2% + 1% = 14% for T-Bonds The solution discusses long term t-bonds and risk free rate for t-bills.

• T-bills and treasury bonds

  T-bonds =2% Assume that a highly liquid market does not exist for long-term T-bonds, and the expected rate of inflation is a constant.

• Analyzing risk

  (1+nominal rate) = (1+real rate) (1+inflation rate) (1+5%) = (1+real rate) (1+4%) Real rate = 1.05/1.04 -1 = 0.96% 3. What is the default risk premium on 30-year AAA corporate bonds?