1. Use the table to answer the question
Bond Features
Face Value = $1,000
Coupon Rate = 7.00%
Maturity in Years = 3
Market Interest Rate = 4.50%
What is the % current yield from today to year 1?
6.5499%
6.4189%
6.2879%
6.6809%
6.6154%
2. You are given the following information about a portfolio you are to manage. For the long-term you are bullish, but you think the market may fall over the next month.
Portfolio Value: $1 million
Portfolio’s Beta: 0.60
Current S&P 500 value: 1400
Anticipated S&P 500 Value: 1200
For a 200-point drop in the S&P 500, by how much does the value of the futures position change?
A. $100,000
B. $200,000
C. $500,000
D. $250,000
E. $50,000