Inflation Essay Examples

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Inflation is expected to be 2% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities? For the 3 year treasury bond Yr = y* + T + Mp Mp= maturity risk premium. Y = Number of years. Yr= Yield rate T = average inflation for the period r = 3 + ((2+4+4)/3) + 0 r = 6.33% For 2 year treasury bond Yr = y* + T + Mp r = 3 + ((2+4)/2) + 0...

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Finance

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inflation announcement leads to the prices in the market falling. b. When Big Widget’s earnings fell within analysts’ expectations, then there is no change in unsystematic risk, which mean that price of Big Widget will probably remain constant. c. When government reports an expansion of the economy, prices in the bourse will probably remain spike. d. The sudden death of the company’s directors qualifies as unsystematic risk, which means that the prices of Big Widget will probably fall. e. The increase in corporate taxes is part systematic and unsystematic risks as it affects the calculation of tax expenses of both Big Widget and companies trading on the bourse, and prices are likely...