How is using the effective yield equation useful in


1. Rank order the yield curves from lowest to highest rate at 5 years and 25 years. Write the asset name under the rate indicator. Then find the yield spread in basis points (bps) between the safest asset and the other assets. Enter these figures on the spread row centered between the ratecolumns using the following template:

5yrs:Bondbps spread

Low rate US Treasury: 0

Middle rate Apple Inc: 39

High rate Russia: 121

25yrs:Bondbps spread

Low rate US Treasury: 0

Middle rate Apple Inc: 103

High rate Russia: 196

2. How is using the effective yield equation useful in explaining the bps spread you observe in 1. Paste it into your homework and explain how it relates:

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Financial Management: How is using the effective yield equation useful in
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