Assume that you made a repo transaction in which you sold securities for 50 million TL and will buy the securities back for 50,025,000 one day later. What is the repo rate to you? Why would you do such transaction?

Assume that you made a repo transaction in which you sold securities for 50 million TL and will buy the securities back for 50,025,000 one day later. What is the repo rate to you? Why would you do such transaction?

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

See similar textbooks

Similar questions

You are an investor in the world where short-selling assets is prohibited. Suppose that the price of asset X in period 0 is $200. This asset will pay a dividend of $8 one year from now in period 1. Let the riskless interest rate from 0 to period q be 5%.Assume the price for a future contract delivery in period 1 is $210. a) Can you make an arbitrage profit when $210 is the price? If so, state specifically what financial transaction? b) Now, assume the price for a futures contract with delivery in period 1 is K190. Can you make an arbitrage profit when this is the price? If so, state specifically what financial transaction you would make in 0 and period 1 to realize a profit. If not, explain?
As an investor you have the secruities available for investment in Table 1: Table 1 - Expectred Returns Standard Securities e Deviation e A 10% e 20% e 30% 60% e T-Bills 5 Correlation Coefficient (p) between -0.2 A and B Degree of Risk Aversion 5 Required: a) Find the optimal risky portfolio (P) and its expected retum and standard deviation. b) Find the optimal final portfolio (F) and its expected return and standard deviation. +
Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified Duration = 2.6 years Value = RM1.5 million Liability - Bond B Modified Duration = 3.1 years Value = RM1.0 million a. Calculate the duration gap. b. What is the expected change in Net Worth if interest increases by 1%? c. What should or could you to achieve immunised balance sheet? Note: Please show all workings.
Suppose you purchase a T-bills that is 125 days from maturity for $9,765. The T-bills has a face value of $10,000.a. Calculate the T-bills’s quoted discount rate. b. Calculate the T-bills’s annualized rate.c. Who are the major issuers of and investors in money market securities?
Assume you have the following asset and liability in your balance sheet Asset - Bond AModified Duration = 1.5 yearsValue = RM1 million Liability - Bond BModified Duration 2.6 yearsValue = RM2 million a. Calculate the duration gaps?b. What is the expected change in Net worth if interest increases by 1%?c. What should or could you to achieve immunised balance sheet?
02a) Why is wealth maximization considered as a better measure than profit maximization? b) You are going to deposit in saving account Tk. 3,00,000 today. You will receive Tk.4,80,000 from the bank at the end of year 7. What will be the rate of interest of yourdeposit? c) Mr. Kobir has been offered to deposit of Tk. 10000 today with an interest rate of 12%.Calculate the value on this opportunity after 5 years, if the interest rate is:(i) Compounded Semi-Annually.(ii) Compounded Monthly. d) Gabrielle just won Tk. 10,00,000 in the state lottery. She is given the option of receivingeither alternative A or B shown in the following table at the end of each of the next 5years. She decides to choose the payment alternative—annuity or the mixed stream ofpayments— that provides the higher future value at the end of 5 years. If Gabrielle canearn 5% annually on her investments, which option should she take? End of year Cash flow stream…
Suppose you start with buying a stock in £ (equivalent to $100) when the exchange rate is £1 = $1.5. One year later, the stock price changes to £75, and you sell it. At the time of the sale, the exchange rate is £1 = $1.6. What is your total percentage return? What percentage of your return is due to the exchange rate? Total return = 12.50%; Exchange rate return = 6.67%. Total return = 20%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 0.0%. Total return = 12.50%; Exchange rate return = 7.50%. Total return = 0.0%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 6.67%.
An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t=0 he agrees to invest £5.0 for two years, he will receive £7.1 at time t3D2 years. Alternatively, if at time t=0 he agrees to invest £4.4 at time t=1 for either one year or two years, he will receive £7.6 or £8.0 at times t=2 and t=3, respectively. Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing annual interest of 6.5% and is redeemable after 3 years at 105%. State your answer at 2 decimal places. Answer: Check
A security dealer plans to purchase $100 million of T-notes at the next auction. The dealer anticipates holding the securities one day and plans to finance the purchase with an overnight repurchase agreement. Currently overnight repo rates are at 3%. Explain how the repurchase agreement would work in this case? Determine the dollar interest, selling price, and repurchase price on the repurchase agreement? What type of repurchase agreement would the dealer need if there was a possibility that it could take several days to sell the securities?
Suppose that you expect to receive an inheritance of £10,000 in one year. You will want to put this money then on a one-year deposit. Suppose further that, as of today, you are entering into a forward rate agreement to receive 4% on £10,000 for a one-year starting in one year. What is your gain/loss when the realised one-year forward rate in one year is higher than 4%? Provide a relevant example and explain your reasoning.
Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified Duration = 2.6 years Value = RM1.5 million Liability - Bond B Modified Duration = 3.1 years Value = RM1.0 million a. Calculate the duration gap. b. What is the expected change in Net Worth if interest increases by 1%? Assume previous interest is 10% c. What should or could you to achieve immunised balance sheet? Note: Please show all workings.
1. What is the percentage margin of a margin call if an investor has purchased $10,000 worth of securities and the broker requires a margin of $5,000?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS