Given the following data on debt U.S. Treasury debt instruments:
1-year note yield = 4.42% 7-year note yield = 5.64%
2-year note yield = 4.69% 8-year note yield = 5.70%
3-year note yield = 5.02% 9-year note yield = 5.86%
4-year note yield = 5.02% 10-year note yield = 5.95%
5-year note yield = 5.35% 11-year note yield = 5.90%
6-year note yield = 5.50% 12-year note yield = 5.99%
And constant premiums of 0, .17%, .41%, .63%, .82%, .98%, 1.12%, 1.22%, 1.30%, 1.37%, 1.42%, 1.45%, 1.47%
- Calculate the expected market yields for a (1,5,2) path.
- Calculate the expectations yields for a (3,4,1) path.
- Calculate the real world yield for a (3,5) path
- Calculate the expected preferred habitat yield for a 5-year note purchased at the beginning of year 2.
- Calculate the expectations yield on a 4-year note purchased at the beginning of year 5.
- Determine the expectations yield on a 10-year note purchased today.
- Determine the yield on a 12-year Treasury note purchased today.
- Describe the yield curve and provide a general interpretation of what implies about the economy.