--%>
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 Operating Expenses and Equipment

    Operating Expenses and Equipment (OE&E): This is a class of a support appropriation which comprises objects of expenditure like general expenses, communication, printing, travel, data processing, tools, and accessories for the equipment.

    		•
  • Q : Derive the long-run aggregate supply

    Normal 0 false false

  • Q : Explain Budget Bill Budget Bill : The

    Budget Bill: The legislation symbolizing the Governor’s proposal for spending authorization for the subsequent fiscal year. The Budget Bill is all set by the Department of Finance and submitted to each house of the Legislature i

    		•
  • Q : Describe factors which common

    Describe some factors which common stockholders consider while deciding how much, if any, cash dividends they want from the corporation wherein they have invested? Common stockholders would assume the company's investment opportunity, their requ

    		•
  • Q : Selection of board of directors of

    How are the members of the board of directors of corporation selected and to whom do these board members owe their prime allegiance? Members of corporation's board of directors are chosen by the common stockholders and owe their allegiance to th

    		•
  • Q : Define Veto Veto : It is the Governor's

    Veto: It is the Governor's Constitutional authority to reduce or remove one or more items of appropriation while accepting other parts of a bill.

    		•
  • Q : What is Continuing Appropriation

    Continuing Appropriation: This is an appropriation for the set amount which is obtainable for more than 1-year.

    		•
  • Q : Explain Public Service Enterprise Fund

    Public Service Enterprise Funds: For legal base accounting purposes, the fund categorization which identifies funds utilized to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to user (tha

    		•
  • Q : Explain Governors Budget Summary or

    Governor's Budget Summary (or A-Pages): This is a companion publication to the Governor’s Budget which outlines the Governor’s goals, policies, and objectives for the budget year. This gives a perspective on important fiscal and/or structu

    		•
  • Q : What is Non-governmental Cost Funds

    Nongovernmental Cost Funds: For lawful basis purposes, employed to budget and account for revenues other than common and special taxes, licenses, and fees or some other state revenues.

    		•