--%>
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 : How is finance associated to accounting

    How is finance associated to the disciplines of accounting and economics? Financial management is basically a combination of accounting and economics. Firstly, financial managers employ accounting information such

    		•
  • Q : How cash and capital budget relate to

    Describe how the cash budget and the capital budget associate to proforma financial statements.The cash budget illustrates the projected flow of cash in and out of the firm for particular time periods. The capital budget illustrates planned expe

    		•
  • Q : Working capital what are the advantages

    what are the advantages and disadvantages of working capital source of finance

    		•
  • Q : Describe benefits of the JIT inventory

    Describe the benefits of the JIT inventory control system? The just-in-time (JIT) inventory control system lowers inventory carrying costs & tends to raise quality.  

    		•
  • Q : Biometrics in banking operations

    Biometrics is one kind of technology that can be used to control these kinds of fraudulent practices. May be it is the system which cannot completely stop the practices but yes at least it is the way which can reduce it to the barest minimum. The conv

    		•
  • Q : What is Detail of Appropriations and

    Detail of Appropriations and Adjustments: A budget display, for each association, that replicates appropriations and adjustments by fund source for each of the character of expenditure, (that is, State Operations, Local Assistance, and Capital Outlay)

    		•
  • Q : Frauds in banks Frauds in banks : In

    Frauds in banks: In today’s world all the financial institutions face a major problem of security in banking operations. Today it is a challenge in front of ever bank to secure its functioning and avoid the fraudulent practices in their banks. I

    		•
  • Q : Compare diversifiable and non

    Compare diversifiable and non diversifiable risk. Which do you think is more significant to financial managers within a business firms?Diversifiable risk can be dealt along with by, of course, diversifying. Generally non diversifiable risk is co

    		•
  • Q : Does high operating leverage mean high

    Does high operating leverage for all time mean high business risk? Describe. High operating leverage does not for all time mean high business risk. If the company's sales are fairly stable then the variation into operating income would be smal

    		•
  • Q : Describe who owns a credit union

    Describe who owns a credit union? Credit unions are owned through their members. While credit union members put money in their credit union, they are not "depositing" the money technically.  In spite of, they are purchasing shares of the cr

    		•