1. Explain FOUR(4) reasons that make money market instruments a popular investment among investors even though the return is low

Q: Calculate the price, and BEY of a treasury bill that matures in 200 days, has a face value of…

A: Treasury Bills, are also called T-bills are the instruments of the money market. T-bills are…

Q: Assume that interest rate on a 182-day, $1 million face value T-Bill is currently selling at a…

A: Given T bill Worth                  =             $ 1 million Currently selling               =…

Q: A put option on the Bank Nifty with expiry date 30-June-2022 (20 days from now) and Strike Price Rs.…

A: We have; Strike price is Rs. 35,000 Spot Price is Rs. 35,000 Annual Volatility is 30% Risk free rate…

Q: A B C Year 1 $43 123 13 Year 2 $ 43 13 Year 3 $ 43 113 a. Calculate their durations if the interest…

A: Portfolio duration is calculated as shown below.

Q: Time value of money practice problems.  How would you solve these using a financial calculator?…

A: N = Number of years I/YR = Rate PV = Present value of the bond PMT = Payment FV = Future value Here,…

Q: e future value and present value equations also help in finding the interest rate and the number of…

A: Future value of the amount includes the amount being deposited and the amount of interest being…

Q: Treasury note and bond data are representative over-the-counter quotations as of 3 p.m. Eastern time…

A: Bonds are paid annual coupon payments on the rate specified and par value of bond is paid on the…

Q: Write the formula for each problem and substitute the values. 1. Compute the intrinsic value of a 15…

A: The intrinsic value of a business (or any investment security) is that present value of all expected…

Q: If a security currently worth $5,600 will be worth $12,379.82 seven years in the future, what is the…

A: The interest rate is the rate representative of the time value of money and it the return in %…

Q: 4. Alpha Co. has 5,000 shares outstanding and its net income was $25,000. What is its earnings per…

A: given Net income = $25000

Q: Third Mortgage Investors makes money by purchasing mortgage backed securities (MBS), stripping them…

A: MBS: These are market instruments that are backed by the pool of loans or mortgages.

Q: Suppose that the US treasury issues a Treasury bill with a one-year maturity. The T-bill sells in…

A: Current price of a security maturing in year 1 is known. The yield to maturity is to be determined.

Q: The promised cash flows of three securities are listed below. If the cash flows are risk-free, and…

A: Here, To Find: No-arbitrage price of security =?

Q: Q6. Consider an asset with a current market value of $400,000 and a duration of 5 years. Assume the…

A: In this we have to calculate present value of bond to get value of equity and price of bond will…

Q: (i) What is the approximate annualized yield on a 6-month Treasury bill that is sold at $95 in the…

A:

Q: 2. For which of the problems listed in parts a through c would you want to use real payments and…

A: Real and nominal Interest rate Real interest rate is the rate that shows the actual cost of…

Q: It is Jamuary 9, 2013. The price of a Treasury bond with a 12% coupon that matures on October 12,…

A: Cash price of bond: The price at which shareholder purchased the bonds.

Q: Give typing answer with explanation and conclusion  1. Bert owns a bond that will pay him $75 each…

A: The bond is issued by the company and it is considered to be the debt instruments. It has the face…

Q: Assume that today’s Wall Street Journal is showing the following information for a given Treasury…

A: The bid and ask yield: Treasury bills are priced at a discount to face value. Since these bills are…

Q: An investor wants to be able to buy 4 percent more goods and services in the future in order to…

A: I, II, and III are correct.

Q: What is the present value of a security that will pay $3,000 in 20 years if securities of equal risk…

A: The Formula to Calculate the Present Value  =Future Value x 1/(1 + Rate of Interest)^Period (in…

Q: An investor pays £100 for an asset. Exactly one year later, the investor sells the asset for £X.…

A: Present value of the Assets = pv = £100 Time = t = 1 years Real yield = y = 8.7% + 3% = 11.7%…

Q: 2. Consider a Financial Institution with the following assets and liabilities. Asset A has a…

A: Given information: Assets Amount Liabilities Amount 2 year Asset A $50,000 3 year Liability A…

Q: A Treasury bill has a bid yield of 2.79 and an ask yield of 2.77. The bill matures in 175 days.…

A: Here, Bid yield = 2.79% Ask yield = 2.77% Maturity period = 175 days Face value = $1,000 To Find:…

Q: A security dealer plans to purchase $100 million of T-notes at the next auction. The dealer…

A: Repurchase agreement: It is a short-term borrowing agreement between the dealer & the investors…

Q: Given the expected increase in USD interest on the market, the Asset and Liability Committee of XYZ…

A: Bond Immunization: It represents a method of risk mitigation that matches the duration of assets…

Q: Third Mortgage Investors makes money by purchasing mortgage backed securities (MBS), stripping them…

A: Amount of Purchases = $100,000 Interest rate(r) =9% = 0.09 Years(n) = 30  Let annual payments = P…

Q: Finance Suppose that there is 30-year coupon bond with par value of $100 and Macaulay duration of…

A: The percentage change in a bond's price represents the relative difference between its initial price…

Q: Consider the information below relating to the monthly rates of return for two companies X and Y…

A: Financial leverage is the utilization of debt to acquire additional assets. Leverage is used to…

Q: 8. Demonstrate your understanding on Chapter 6: Expectations Theory/ Cross-Product a. One-year…

A: Two-year yield using geometric average is calculated using the formula: Average rate of inflation…

Q: A Treasury bill has a bid yield of 3.46 and an ask yield of 3.4. The bill matures in 123 days.…

A: Bid Yield = 3.46%Ask yield = 3.4%Bills Maturity =123 daysFace value = $1000For calculation purpose 1…

Q: 2 What is the Present Value of $10,000 invested in a 10-year US Treasury Note- (semi-annual coupon)…

A: Data given:: Par value = $10,000 Coupon = 3.225% (semi- annual coupon) = 3.225%/2 = 1.6125 %. n=10…

Q: What effect would the calculations performed have in terms of the company’s decision to raise…

A: When the rate of interest increases, the bond price decreases, therefore, the company will have to…

Q: total market value of the equity of Okefenokee Condos is $6 million, and the total value of its debt…

A: Market Value of equity = $6,000,000 Market Value of debt = $4,000,000 Beta of stock = 2 Market risk…

Q: solve and show work ai

A:

Q: 6) Using the appropriation method, calculate yield to the maturity of a debenture with a face value…

A: The objective of this question is to calculate the yield to maturity (YTM) of a debenture using the…

Q: The future value and present value equations also help in finding the interest rate and the number…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: An investor purchases a bond worth Rp. 100 million, with a 15% interest tax on the bond. The…

A: Inflation rate and taxes affects the real value received by an investor.  These are to be adjusted…

Q: Suppose tnat ABC bank decides to purchase a T-note and convert it into a STRIP. The T-note has a…

A: A STRIP is formed when the cashflows (coupons amd Principal) of a bond are separated and traded as a…

Q: 1. You follow the equity index HSI using an index fund in Hong Kong. You have signed an interest…

A: Swaps are a tool used in risk management that transfers financial risks, such as changes in…

Q: Below are two T-Bill purchases: A T-Bill with a face value of $900,000 and current market price of…

A: A money market instrument is a most liquid financial security as compared to other financial…

Q: Suppose you sell seven March 2021 silver futures contracts on December 4, 2020, at the last price of…

A: Short position refers to the situation where an investor sell the contract without having the asset…

Q: A company needs to borrow £10 million for 6 months, 2 months from now. The type of FRA and the…

A: A company needs to borrow £10 million for 6 months, 2 months from now. We need to suggest an…

Q: Question 4 a) Mike is a speculator and has the following information with regard to the financial…

A: Covered interest arbitrage Covered interest rate arbitrage uses future or forward rates to calculate…