A “three-against-nine” FRA has an agreement rate of 4.76 percent. You believe six-month LIBOR in three months will be 5.14 percent. You decide to take a speculative position in a FRA with a $7,000,000 notional value. There are 182 days in the FRA period. Determine what your expected profit will be if your forecast is correct about the six-month LIBOR rate. (

Q: Asset XYZ is selling for $200 in the cash market. Asset XYZ pays the holder $16 per year in…

A: Selling price or Spot price(S) is $200 Dividend Per year is $16, 3 month interest rate(r) is 6% per…

Q: An asset currently costs $432. The risk-free rate in the economy is 2.8% per year. What should be…

A: Current price = p = $432 Risk free rate = r = 2.8% Time = t = 8 / 12 year

Q: Suppose you take a 3/1 interest - only, 30-year ARM for $140,000.00 with an interest - only contract…

A: The annual Percentage Rate is a measure of the total cost of borrowing money over a year, expressed…

Q: Calculate yields on 3-month T-bills for each of the prices in the following table and enter your…

A: The market value of a bond is the price at which you could sell it to another investor before it…

Q: a) What will be the agreed rate if you enter an FRA agreement with this dealer? Explain your answer.…

A: FRA is an over-the-counter derivative instrument to lock in the interest rate. FRA stands for…

Q: Which option yields a higher return? Option A: $50 in 6 months and $50 in 12 months, assuming a…

A: Here,Option A:$50 in 6 Months (n1)$50 in 12 months (n2)Interest Rate (r) is 3%Compounding Period (m)…

Q: Suppose the risk.tree interest rase is 6.2% APR with monthly compounding. If a $3.5 million MRi…

A: APR is a number that shows the actual yearly expense of money throughout the life of a loan or the…

Q: Suppose a trader opens a short position in two rice futures contracts. Each contract is for 5,000…

A: Data given: Short position in two rice futures contracts. Each contract is for 5,000 kilograms.…

Q: AMXL price is at 16.20, AMXL is expected to pay a dividend of 16 cents in 30 days and pay a dividend…

A: Forward price refers to the agreed-upon price at which a specific financial instrument, such as a…

Q: A “three-against-nine” FRA has an agreement rate of 4.79 percent. You believe six-month CME Term…

A: Here,Type 3 X 9 FRA, this means that the FRA is of 6 months period starting from three months from…

Q: % debenture is $1,000 with maturity is 3 years. What would be the price if yield rate is 8%? use…

A: The given problem can be solved using PV function in excel. PV function computes current price  for…

Q: You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD price of 0.57 and a…

A: Call option gives the opportunity to buy the currency on the expiration but there is no obligation…

Q: You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike premium of…

A: Call option gives the opportunity to buy the currency on the expiration but there is no obligation…

Q: A commercial bill with a face value of $50 000 has a current price of $49,291. This bill is trading…

A: Given information: Face Value : $50,000 Current price : $49,291 Yield rate : 7.5% The number of days…

Q: . What to the nearest cent is the value of the long forward contract?

A: A financial agreement between two parties to purchase or sell an asset at a defined future date for…

Q: ETS offers 5-year CDs at 7.63% compounded quarterly and BOS offers a 5-year CD at a rate of 7.59%…

A: The calculation is:

Q: To find the quoted price of a 180-day T-bill with a 5% yield and the contract price for a $1,000,000…

A: Treasury bills are short term debt securities issued by U.S. Department of the treasury serves as an…

Q: Suppose the risk-free interest rate is 6.2% APR with monthly compounding. If a $3.3 million MRI…

A: Here, Interest Rate6.20%Lease Amount $3,300,000.00Monthly Lease Payment $38,500.00Annuity…

Q: You have purchased a $1,000 Face Value, 9-month (270-day) Treasury-bill (T-bill) with a quoted…

A: Given:Face Value (FV) = $1,000Quoted Market Discount Yield (DMY) = 5.25%Number of Days to Maturity…

Q: 1. Assume an investor purchased a six-month T-bill with a $10,000 par value for $9,800 and sold it…

A: Purchase price = $9,800Selling price = $9,850Days = 90 daysThe following formula will be used to…

Q: You would like to purchase a T-bill that has a $20,000 face value and is 309 days from maturity. The…

A: Discount yield = (Par value - current price) / par value  * 360 days / days to maturity

Q: You have bought 6-month put options on the Mexican Peso with a strike price of 0.0490 $/peso at a…

A: Put option gives the opportunity to sell the currency at the expiration but there is no obligation…

Q: Suppose the price of copper is $4.10 per ounce. Copper purchased as an investment must be stored…

A: Forward price of the copper is the sum of expected price of the copper and expected storage cost.

Q: what is the liquidity premium on the commercial pape

A: The liquidity premium is the extra return or yield that investors demand holding an asset that is…

Q: A Firm buys an FRA on 90-day LIBOR expiring in 30 days with Notional principal of $20 million. The…

A: When LIBOR is 8%:Notional principal ×({Rate at settlement−FRA rate}×Days360)/(1+Rate at settlement…

Q: Calculate yields on 3-month T-bills the T-bills have a maturity value (1 Price (PB) of a 3-Month…

A: Tbills are issued by federal government to give liquidity and maintain liquidity in the financial…

Q: year forward contract was established with a price of $70.25. Now, a year and a half later (t= 1.5…

A: The forward are contract that are to be settled in the future based on the spot prices and it may be…

Q: A commercial bill with a face value of $50 000 has a current price of $49,291. This bill is trading…

A: The formula to calculate YTM is (FV/PV)^(1/t)-1 where  FV= Face value Pv= Present value YTM= yield…

Q: Reference rate is 6-month Treasury bill (182 days to maturity). The FRA settles in 270 days. The…

A: To calculate the amount of compensation that must be paid under the agreement at settlement, we need…

Q: You purchase a TIP note with an onginal principal amount of $1,000,000 and a 4 percent annual coupon…

A: TIP note pays coupons as per the semiannual inflation rate in a given period. If inflation is…

Q: the discount yield on a 3 month T-bill is 6.5%. assuming there are 360 days in a year, what is the…

A: Given: Face value = 1,000 Interest rate = 6.5% Period = 3 months or 90 days(3*30)

Q: Suppose that a lender originates a loan for $380,000 at 4.5% for 30 years. This is a fixed rate loan…

A: Variable in the question:Loan=$380,000Rate=4.5% N=30 yearsOrigination fees=$2500Assumption that the…

Q: A Treasury bill has a bid yield of 2.75 and an ask yield of 2.73. The bill matures in 152 days.…

A: A Treasury bill is a government-backed money market security that yields a risk-free return for a…

Q: A commercial bill with a face value of P50 000 has a current price of P49291. This bill is trading…

A: Time to maturity means the time in which the bill will be matured and the maturity amount will be…

Q: Consider a contract that pays out $1,103 in 6 months, $139 in 12 months, $72 in 18 months, $5 in 2…

A: Contract price refers to the price at which the goods are purchased by the buyer from the seller as…

Q: Suppose that a party wanted to enter an FRA that expires in 121 days and is based on 55-day LIBOR.…

A: It is a case of a party taking a short position in the forward contract agreement. Here, the party…

Q: You purchase a T-Bill which is selling at a discount of 12 TL. The maturity of this T-Bill is 255…

A: Yield represents the additional amount that a holder received for investing in financial instrument.

Q: A commercial bill with a face value of P100,000 has a current price of P97,711. This bill has 95…

A: Yield refers to the earnings generated on an investment over a particular period of time. It is…

Q: forward contract on January 1 that matures six months later. The forward price was $220 at the time…

A: Forward contract:The value of a forward contract stems from its distinct capacity to offset risks…

Q: A promissory note from Aristotle Co. has $350,000 face value and 30 days until maturity. If the…

A: A promissory note is a valid, financial instrument in which one party guarantees another to settle…

Q: ETS offers 6-year CDs at 8.63% compounded quarterly and BOs offers a 6-year CD at a rate 8.59%…

A: We use the annual yield (ay) formula: Where, r = rate of interest n= no. of compounding periods…

Q: If Elizabeth co. believes that an 0.7 percent default risk premium, an 0.2 percent liquidity…

A: A measure of the return an investor might anticipate from investing in commercial paper is the yield…

Q: You are given a nominal annual rate of disc Hint: Let X be the value on 1/1/2010. The fut O <$10,500…

A: Present value is today equivalent value of the future money based on the time value of money and…

Q: You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0…

A: Call option gives the opportunity to buy the currency on the expiration but there is no obligation…

Q: Assume that you conduct a relative value trade and close it out after 34 days. Your 34-day return is…

A: Effective annual yield is the real rate of return that is obtain on an investment as it considers…