A promissory note has 103 days until it matures, has a face value of $600, and is currently trading at a price of $594.96. What is the current yield of the security? Select one: a. 2% b. 5% c. 4% d. 3%
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- The promised cash flows of three securities are listed below. If the cash flows are risk-free, and the risk-free interest rate is 6.0%, determine the no-arbitrage price of each security before the first cash flow is paid. (Click on the following icon in order to copy its contents into a spreadsheet.) Security A B C Cash Flow Today ($) 500 0 1,000 Cash Flow in One Year ($) 500 1,000 0 ... The no-arbitrage price of security A is $971.7. (Round to the nearest cent.) The no-arbitrage price of security B is $ (Round to the nearest cent.)The promised cash flows of three securities are listed below. If the cash flows are risk-free, and the risk-free interest rate is 5.0%, determine the no-arbitrage price of each security before the first cash flow is paid. Security Cash Flow Today ($) Cash Flow in One Year ($) A 800 800 B 0 1600 C 1,600 0 The no-arbitrage price of security A is how much? ? (Round to the nearest cent.) The no-arbitrage price of security B is how much? ? (Round to the nearest cent.) The no-arbitrage price of security C is how much? ? (Round to the nearest cent.)The current return of security?
- The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates. Based on the pure expectations theory, is the following statement true or false? A certificate of deposit (CD) for two years will have the same yield as a CD for one year followed by an investment in another one-year CD after one year. True O False The yield on a one-year Treasury security is 4.6900%, and the two-year Treasury security has a 7.0350% yield. Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? O 9.4500% O 10.7730% O 8.0325% O 12.0015%Recall that on a one-year Treasury security the yield is 4.0000% and 4.8000% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.35%. What is the market’s estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) a4.1666% b5.5882% c4.9019% d6.2254% Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the market’s estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.) a6.61% b5.46% c6.45% d6.69%I want to correct answer accounting
- The real risk-free rate is 3 percent. Inflation is expected to be 3.5 percent this year, 5 percent next year, and 6 percent thereafter. The maturity risk premium is estimated to be 0.11 ´ (t - 1)%, where t is the number of years to maturity. What is the yield on a 7-year Treasury note? a. 9.66% b. 8.50% c. 0.77% d. 9.16% e. 7.16%A bond, described in the exhibit below, is sold for a settlement on 8 April 2021.Annual Coupon rate:12%Coupon payment frequency: monthlyMaturity date*: 11396 + Settlement dateDay count convention : 30 / 360Annual yield to maturity:9%Face value:1,000 USDCalculate the dirty price (full price), clean price (flat price) and accrued interest (AI). * Example if your ID number 9876, then 8 April 2021 + 9876 days = 22 April 2048A 38. Subject:- finance
- 1.Consider a security with a face value of $100,000 to be repaid at maturity. The maturity of the security is 1.5 years. The coupon rate is 7% p.a. and coupon payments are made semi-annually. The current market rate is 12% p.a. What is the security’s duration ? 2.Consider a bond with a face value of $100 and an annual coupon of 12%. Current market rates are 15% p.a. What is the change in price of the bond if current market rates increase by 1% and the remaining time to maturity is one year? Use duration model and round to two decimals.Use duration model and round your final answer to 2 decimal places.E.g. if the final answer is -5.8312%, type -5.83 in the answer box, if the final answer is 5.8312%, type 5.83 in theanswer box.(Do not type the percentage sign).Type -0.87 in the answer box, not -0.0087 3.If a bank wants to lengthen its asset duration, what type of risk is the bank concerned about?A.The risk of rising interest rates. B.Foreign exchange rate risk. C.The risk of falling…A $1,000 Treasury inflation-protected security is currently selling for $965 and carries a coupon interest rate of 3.35 percent. K a. If you buy this bond, how much will you receive for your first interest payment, assuming no interest adjustment to principal during this time period? b. If there's a 0.86 percent increase in inflation, what will be the new par value of the bond? c. What is your new semiannual interest payment? d. What would the par value be at maturity, assuming a 3.00 percent annual inflation rate and ten-year maturity period? Click on the table icon to view the FVIF table i ... a. If you buy this bond, assuming no interest adjustment to principal during this time period, your first interest payment would be $ 16.75 (Round to the nearest cent.) b. If there's a 0.86 percent increase in inflation, the new par value would be $1008.60. (Round to the nearest cent.) c. The new semiannual interest payment is $ (Round to the nearest cent.) prPrices of zero-coupon, default-free securities with face values of $1,000 are summarized in the following table: Maturity (years) Price (per $1,000 face value) 1 2 3 $970.76 $939.38 $904.87 Suppose you observe that a three-year, default-free security with an annual coupon rate of 10% and a face value of $1,000 has a price today of $1,181.95. Is there an arbitrage opportunity? If so, show specifically how you would take advantage of this opportunity. If not, why not? Is there an arbitrage opportunity? (Select the best choice below.) O A. No О В. Үes OC. Not enough information. How would you take advantage of the arbitrage opportunity? (Select from the drop-down menus.) Buy V coupon bond(s), sell short V one-year Zero(s), sell short two-year Zero(s), and sell short three-year Zero(s). This would result in a net profit of $ (Round to the nearest cent.)
