--%>
Assignment Help - homework help

All rates are stated annually with semiannual compounding

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. Ignore any possible transactions in the Repo Market.


a. Do you buy or sell contracts?

b. How many contracts would you buy or sell?

   Related Questions in Corporate Finance

  • Q : Problem on maintaining dividend Jackson

    Jackson Company has 6 million shares of common stock selling at $55 each. It also has $120 million in long-term bonds with coupon 7%, selling at 90. The tax rate of Jackson is 33%. Next year its EBIT is expected to be $25 million with a standard deviation of $7 millio

    		•
  • Q : Effective annual yield problem Stanley

    Stanley invested in a municipal bond which promised an annual yield of 6.7 %. The bond pays coupons twice a year. What is the effective annual yield (abbreviated as EAY) on this investment? (1) 13.4%  (2) 6.81%  (3) 6.70%  (4) None of the above

  • Q : Zurich Pvt Ltd. You have joined Zurich

    You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The firm

    		•
  • Q : Explain the model of Heath Explain the

    Explain the model of Heath, Jarrow and Morton regarding tree building or Monte Carlo simulation.

    		•
  • Q : Explain method to analyze and to value

    Are there any methods to analyze and to value seasonal businesses?

    		•
  • Q : Types of agency Types of agency :

    Types of agency: Specific types of Agency include:A) Auctioneers: Are an agent of vendor until the fall of the hammer when they become an agent for the purchaser.B)

    Q : An example of use beta of Kinepolis in

    A financial consultant is valuing the company I set as an objective (an entertainment centre) by discounting the cash flows until the end of the dealership at 7.26% (interest rate on 30-year-bonds = 5.1%; market premium = 5%, and Beta = 0.47%). 0.47 is a beta provided

    		•
  • Q : FIN3000 Corporate Finance Task

    Task Description Length: 1000-2000 words (up to 500 words above 2000 permitted) Description: • Complete this assignment in groups of 4-5 students. • Maintain a portfolio of financial issues taken from 8 news sources. • Analyse the articles with reference to theory covered in class and h

    		•
  • Q : Investors are irrational or naive

    Explain how companies with substandard financial history can draw the attention of investors. Are investors irrational or naive?

    		•
  • Q : Problem on Bond Price Kevin is

    Kevin is interested in buying a 5-year bond which pays a coupon of 10 % on a semi-annual basis. The present market rate for similar bonds is 8.8 %. What must be the present price of this bond? (Round to the closest dollar.) (a) $1,048  (b) $965  (c) $1,099&n

    		•