1. (9 marks) The following table shows the yield to maturity (YTM) of various types of bonds on March 15, 2022. U.S. Tre

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1 9 Marks The Following Table Shows The Yield To Maturity Ytm Of Various Types Of Bonds On March 15 2022 U S Tre 1 (22.5 KiB) Viewed 43 times

1. (9 marks) The following table shows the yield to maturity (YTM) of various types of bonds on March 15, 2022. U.S. Treasury Corp. AAA Corp. AA 2-year 1.852% 2.117% 2.216% 5-year 2.107% 2.535% 2.704% 10-year 2.146% 2.942% 3.159% The YTM of a 3-month T-bill is 0.46%. a. What is the expected yield of a three-year Treasury two years from the date above according to the pure expectations theory? (3 marks) b. What is the risk premium of a 5-year T-note? (3 marks) c. What explains the 0.428% difference in YTM between a 5-year U.S. Treasury and a 5-year AAA corporate bond? (3 marks)