--%>
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 : Efficient Market Hypotheses Write

    Write Efficient Market Hypotheses in brief?

    		•
  • Q : Strategy of Bear Spread State when

    State when markets are anticipated to go down then what is the Strategy of Bear Spread?

    		•
  • Q : Valuation & Merger analysis Problem

    Problem 21-1 Valuation Harrison Corporation is interested in acquiring Van Buren Corporation. Assume t

    		•
  • Q : Standard deviation of portfolios returns

    Assume that you have $50,000 which you want to invest in two companies, XYZ Books and ABC Audio. XYZ has a return of 10% and standard deviation 15%, while ABC has return of 15% with a standard deviation of 20%. The correlation coefficient between them is .5. Your port

    		•
  • Q : Explain influences of financial

    Does financial leverage (i.e. debt) have any influence on the Free Cash Flow, upon the Cash Flow to Shareholders, upon the growth of the company and upon the value of the shares?

    		•
  • Q : What are Stock exchanges Stock

    Stock exchanges: A stock exchange provides services useful for trading, issue and redemption of shares and other securities for traders and brokers. They will also provide facility for payment of income and dividends for listed securities. Securities

    		•
  • Q : Who proposed modern quantitative

    Who proposed a modern quantitative methodology for portfolio selection?

    		•
  • Q : Set of conflicts in reducing working

    Give an illustration of a set of conflicts encountered when attempting to reduce working capital?

    		•
  • Q : Profitability Ratios Profitability

    Profitability Ratios: These ratios comprise the Gross profit Margin, Net profit Margin, Operating Margin, Return on Equity (ROE), and Return on Total Assets. Such ratios help the firm to examine its profitability, the trend in profits and aid to take

    		•
  • Q : Historical return on stock market and

    The market risk premium is difference among the historical return upon the stock market and the risk-free rate, for yearly. Why is this negative for some years?

    		•