--%>
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 : Why required return cannot computed by

    Why can we not compute the required return (Ke) by the Gordon-Shapiro model [P0 = Div0 (1+g) / (Ke – g)] in place of using the CAPM? As we identify the current dividend (Div0) and the current share price (P0), we can acquire the growth rate of the dividend by th

    		•
  • Q : Explain the Monte Carlo evaluation of

    Explain the Monte Carlo evaluation of integrals.

    		•
  • Q : Operational efficiency and

    Distinguish between Operational efficiency and informational efficiency?

    		•
  • Q : Minimum pretax earnings XYZ Company is

    XYZ Company is planning to acquire a machine which will cost $200,000, that will last for 4 years. The company employs straight-line depreciation. The tax rate of XYZ is 35% and the proper discount rate in this situation is 12%. (A

    		•
  • Q : Walt disney WAAC You work in Walt

    You work in Walt Disney Company’s corporate finance and treasury department and have just been assigned to the team estimating Disney’s WACC. You must estimate this WACC in preparation for a team meeting later today....?

    		•
  • Q : Is the price of futures the excellent

    Is the price of futures the excellent estimate of €/$ exchange rate?

    		•
  • Q : Benefits of Cash to cash analysis

    Benefits of Cash to cash analysis: The benefits of Cash to cash analysis are as following: 1. Helps in better cash management situation thus, increasing liquidity. 2. The cash a

    		•
  • Q : Problem on stock market John Wong is a

    John Wong is a fresh graduate and has a limited amount of funds for investments. He expects that the Hong Kong stock market will fall soon but he is not familiar with derivatives. In order to gain more money to buy a car, he explores engaging in Hang Seng Index (HSI)

    		•
  • Q : How can optimal capital structure be

    How can optimal capital structure be calculated?

    		•
  • Q : Broad research methodologies Various

    Various broad research methodologies are available with which to study the development of accounting theory. a. Discuss the deductive, inductive, normative, and empirical research methods.