nment: Friday Chapter 6 Assignment Score: 000% SaveExit Subrmit Assignment for G

Question

nment: Friday Chapter 6 Assignment Score: 000% SaveExit Subrmit Assignment for Grading tions Problem 6.0 Check My Work ts remaining Click here to read the eßook: The Determinants of Market Interest Rates Thereal risk free rate is 2.5%. Inflation is expected to be 2.9% this yea, 43% next year, and 2.2S% thereafter. The matitink presum estimated to be 0.05 x (t-1)%, where tumber of years to maturity. What is the yield on a 7-year Treasury note? Do not round your intermediats calculations. Round your answer to two decimal places 8 SDFGH

Explanation / Answer

Yield of 7 year treasury Note

Yield = Risk Free rate + Average inflation premium + Market risk premium

Yield = 0.025 + ((0.029 + 0.043 + 5 * 0.0225)/7) + 0.05 * (7 – 1)%

Yield = 0.025 + 0.026357 + 0.003

Yield = 5.44%

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