Look up the US Treasury yield curve online. i. What is the promised yield for a

Question

  Look up the US Treasury yield curve online.

             i.     What is the promised yield for a 1-month T-bill?

             ii.    For a 6-month T-bill?

             iii.     A 1-year T-bill?

             iv.     A 5-year T-bond?

             v.     A 10-year T-bond?

             iv.     A 20-year T-bond?

             iiv.    A 30-year T-bond?

             iiiv.    On what date did you look up these yields?

             ix.     On what Web site did you find these yields?

       B.   Is this yield curve flat, rising, or inverted?

         C.       Many introductory finance textbooks say, at the beginning of bond valuation problems, "Assume the yield curve is flat." Another way of putting this is "Assume the term structure of interest rates is flat." How would this assumption make the questions easier for students of introductory finance to solve?

Explanation / Answer

1. Yield for 1 month = 0.08%

2. FOr 6 months = 0.35%

3. For 1 year = 0.51%

4. For 5 year =1.73%

5. For 10 Year =2.32%

6. For 20 year =2.75%

10. For 30 year= 3.09%

B. The yield curve is rising indicating that ineterst rates are expected to increase over long term

C. A Flat yiled curve means there is little difference between long term and short term rates and the Fed may to hike rates in the long term. This is assumed flat so that it becomes easy to calculate the duration of bonds.

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