Assignment Help - homework help

all rates are stated annually with semiannual compoundig

1.      Assume the following (all rates are stated annually with semiannual compounding):

a.       Six Month Spot Rate is 2%

b.      Six Month Forward rate starting at month six is 2.2%

c.       Six Month Forward rate starting at month 12 is 2.4%

d.      Six Month Forward rate starting at month 18 is 2.5%

 

Then find the price of a two year treasury note with a coupon rate of 4%

 2.      Assume that you purchase a bond with a 5% annual coupon (paid semiannually) and exactly ten years to maturity.  The          yield is 4.5% (stated annually with semiannual compounding).  After six months, the yield of the bond is 4.3%.  What is          the Total Return for the holding period?

 3.      Suppose that your trading desk bought $96,000,000 face value of the one-year 5.00% coupon bond.  Assume that the             bond is priced at Par.You want to hedge the interest rate risk with T-Bill futures until you can cover the position by                   buying in the market place.One T-Bill Futures Contract will pay the long position $25 for every one basis point drop in               T-Bill rates.I gnore any possible transactions in the Repo Market.

                                                               Do you buy or sell contracts? 

a.       How many contracts would you buy or sell?

 

   Related Questions in Finance Basics

  • Q : What is Fed prime goal in setting

    Normal 0 false false

  • Q : Governments fiscal policy options for

    Normal 0 false false

  • Q : Role of depreciation in estimating

    What kind of role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and therefore affects cash flow through its effect on taxes. Depreciation expense which is incremental to a proposed

    		•
  • Q : Define Limited-Term Position

    Limited-Term Position (LT): Any place that has been authorized only for a particular length of time with a set termination date.Limited-term positions might be authorized throughout the budget procedure or in transactions approved by the D

    		•
  • Q : Define Cash Basis of Accounting Cash

    Cash Basis of Accounting: The base of accounting in which expenditures and revenues are recorded whenever cash is received or distributed.

    		•
  • Q : Describe the fact of common

    Normal 0 false false

  • Q : Determine the new per unit cost of

    Normal 0 false false

  • Q : What is Administration Administration :

    Administration: It refers to the Governor's Office and those individuals, subdivisions, and offices reporting to it (example, the Department of Finance).

    		•
  • Q : What is means of correlation

    What does this mean while we say that the correlation coefficient for two variables is -1? What does it mean if this value were zero? What does it mean if it were +1?Correlation is calculated by the correlation coefficient, represented through t

    		•
  • Q : Explain Object of Expenditure Object of

    Object of Expenditure (Objects): It is a categorization of expenditures based on the kind of goods or services received. For illustration, the budget group of Personal Services comprises the objects of Salaries and Wages and Staff Benefits.

Home | Company Overview | Services | Discover Q&A | Sitemap | Contact Us | T & C | Refund Policy | Copyright Policy | Blog | Q&A | Directory

©TutorsGlobe All rights reserved 2022-2023.