--%>
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 : Bg explain factors that responsible for

    explain factors that responsible for the recent surge in international market

    		•
  • Q : Computing the amount of excess reserves

    Normal 0 false false

  • Q : Make mutual and stockholder-owned

    Compare and make mutual and stockholder-owned savings and associations of loan. Some savings and loan associations are owned through stockholders, just as commercial banks and other corporations are owned through their stockholders.  Other

    		•
  • Q : Explain LBO-risks for equity investors

    Explain LBO? Describe risks for the equity investors and also describe potential rewards? A leveraged buyout is purchase of publicly owned corporation through a small group of investors by using a large amount of borrowed money. The risks for

    		•
  • Q : Define Control Sections Control

    Control Sections: The sections of the Budget Act (that is, 1.00 to the end) giving specific controls on the appropriations itemized in the Section 2.00 of Budget Act.

    		•
  • Q : What is Appropriation Without Regard To

    What is Appropriation Without Regard To Fiscal Year (AWRTFY): The appropriation for a particular amount that is obtainable from year to year until completely expended.

    		•
  • Q : Pros and cons of commercial paper

    Describe pros and cons of commercial paper associated to bank loans for a company seeking short-term financing? Usually commercial paper is a cheaper source of short-term financing for a firm, compared to bank loans. Also, a larger amount of fu

    		•
  • Q : Security in banking operations Security

    Security in banking operations is a major problem in financial institutions all over the world today. The compromise of banking information and data more often than not leads to fraud. Fraud has become quite a challenge for many banks as any slight br

    		•
  • Q : Determine sizes of the MPC- the MPS and

    Normal 0 false false

  • 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.

    		•