A bank has issued a six-month, $1.5 million negotiable CD with a 0.54 percent quoted annual interest rate (4co, apl a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. Complete this question by entering your answers in the tabs below. Required A Required B Required C Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers to 4 decimal places. (e.g., 32.1616)) Band equivalent yield Secondary market quoted yield EAR 0.0019 % 0.5404 % < Required B Required C>

A bank has issued a six-month, $1.5 million negotiable CD with a 0.54 percent quoted annual interest rate (4co, apl a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. Complete this question by entering your answers in the tabs below. Required A Required B Required C Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers to 4 decimal places. (e.g., 32.1616)) Band equivalent yield Secondary market quoted yield EAR 0.0019 % 0.5404 % < Required B Required C>

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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San Miguel Company's 18-year, $1,000 par value bonds pay 6.5 percent interest annually. The market price of the bond is $1,105, and your required rate of return is 8.5 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate or return. c. Should you purchase the bond? Why or why not? (*You must show your calculation process as well.)
A T-bill with face value $10,000 and 82 days to maturity is selling at a bank discount ask yield of 2.9%. What is the price of the bond equivalent yield? Use 365 days per year.
Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 10%. The firm then enters into an interest rate swap where it pays a LIBOR rate of 7% and receives a fixed 5.5% on notional principal of $100 million. What is the firm's effective interest rate on its borrowing? (Round your answer to 1 decimal place.) Answer is complete but not entirely correct. 8.0 Effective interest rate
The government benchmark bond spot rates, for annual compounding bonds, is shown below: 6.60% 6.90% What is the closest 1-year forward rate 3-year from period zero (f 3.1)? 7.20% 7.50% Year 1 2 7.80% 3 4 5 Spot rate 5.90% 6.40% 6.60% 6.90% 7.30%
For the next three questions (1-3) assume what follows: Assume that you acquired a previously issued debt instrument. According to its specifications, it promised to pay $1,000 precisely in two years from the day of its original issue. At the time it was issued, investors anticipated 8.00% in interest on instruments with similar characteristics and risk level. *Note, standard rounding rules apply to all calculations! Q1. What price did you have to pay for this security - under assumption that you acquired it in a secondary market precisely three months after its original issuing, and taking into account that at the time of your acquisition investors anticipated to earn 10.00% in interest on securities with similar features and risk characteristics? A). $857.34 B). $846.37 3000K AS
A bank has issued a six-month, $1.0 million negotiable CD with a 0.53 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $1 million CD falls to $998,900. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.0 million face value CD. Required A: Bond Equivalent Yield ___ EAR____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 3 decimal places.) Required B: CD Holder will receive at maturity_____(Do not round intermediate calculations. Round your answer to nearest whole number.) Required C: Bond Equivalent Yield____ Secondary Market Quoted Yield______ EAR_____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 4 decimal places.
A bank has assets of $500,000,000 and equity of $40,000,000. The assets have an average duration of 5.5 years, and the liabilities have an average duration of 2.5 years. An 8-year fixed-rate T-bond with the same coupon as the fixed-rate on the swap has a duration of 6 years, and the duration of a floating-rate bond that reprices annually is one year. The bank wishes to hedge its balance sheet with swap contracts that have notional contracts of $100,000. What is the optimal number of swap contracts into which the bank should enter? 2,500 contracts. 2,760 contracts. 13,800 contracts. 3,200 contracts. None of the above.
Required: A five-year, 9.0 percent Euroyen bond sells at par. A comparable risk five-year, 10.5 percent yen per dollar dual currency bond pays $843.33 at maturity. It sells for $110,000. What is the implied * per $ exchange rate at maturity? Hint: The dual-currency bond pays 10.5 percent interest on a notional value of ¥100,000, whereas the par value of the bond is not necessarily equivalent to 100,000. Note: Do not round Intermediate calculations. Round PVIFA and PVIF to 4 decimals. Answer is complete but not entirely correct. (per S) Implied exchange rate 192.495
AT - Bill that is 225 days from maturity is selling for $98, 850. The T. Bill has a face - value of $ 100,000 (LG 5 - 2) Calculate the Discount Yield on the T. Bill. Calculate the Bond Equivalent Yield on the T Bill. Calculate the EAR (Equivalent Annual Return) on the T. Bill. What would the Bond Equivalent Yield be, if all other factors remain the same, but the T. bill has a maturity of 300 days. B
Calculate the price of a bond originally issued six years ago that pays semiannual interest at the rate of 10 percent and matures in ten years at $3,000. The market currently requires an 8 percent return for a bond of this risk. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to 2 decimal places.) Price of a bond
What is the bond equivalent yield on a $1 million T-bill that currently sells at 96.9 percent of its face value and is 344 days from maturity? (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))
Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 16-year,1000 $ par value bonds pay 13 percent interest annually. The market price of the bonds is $1070 and the market's required yield to maturity on a comparable-risk bond is 14 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond? a. What is your yield to maturity on the Fingen bonds given the market price of the bonds? % (Round to two decimal places.)

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