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- B. Find the annual interest and maturity/yield rate. FACE VALUE COUPON RATE ANNUAL PRESENT VALUE MATURITY/YIELD RATE INTEREST 5. P1,000.00 3% P850 6. P600,000.00 5% P630,000.00Suppose the interest rate on a one-year Treasury bill is currently 2% and investors expect that the interest rates on one-year Treasury bills over the next three years will be 3%, 5%, and 4%. The liquidity (term) premiums for one- to four-year Treasury notes are 0%, 0.25%, 0.5%, and 1.25%. Use the liquidity premium theory to calculate the current interest rate on a three-year Treasury note.Suppose 6-month Treasury bills are trading at a YTM of 1.1%, 12-month T-bills are trading at a YTM of 2.2%. If 18-month Treasury notes with a coupon rate of 3% are trading at par ($100), then what is the 18-month spot rate? Assume semi-annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.
- Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.01% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ The total cash flow at time 4 (after the fourth coupon) is $ negative number.) b. What is the internal rate of return of your investment? (Round to the nearest cent. Enter a cash outflow as aCan you explain step by step how you get $1,104.23 by plugging in the numbers and using the formula below?: Given: Coupon rate (6.55%), maturity (15 years), purchase YTM (6.15%). Adjust coupon and maturity for semi-annual periods: Coupon per period = 6.55% / 2 = 3.275%. Number of periods = 15 years * 2 = 30 periods. Use the bond pricing formula: Price = (Coupon * (1 - (1 + YTM/2)^-Number of periods)) / (YTM/2 + (1 + YTM/2)^-Number of periods) Plug in the values: Price ≈ $1,104.23.Suppose that $10,000 of a 6-year fixed-principal Treasury note with a coupon rate of 6.5% is purchased by a dealer firm to create zero-coupon Treasury securities. Let’s assume the appropriate annual yield is 8%. What should be the current value of the zero-coupon Treasury security created from the fifth coupon payment?
- Current 1-year spot rate is 3.5%. Annual volatility of interest rates is 10%. If rr₁, =4.5%, calculate the price of a 2-year bond with annual 5% coupon (paid annually). Assume face value of $100. Type your answer...A two-year maturity floater. Assume annual coupon payment and $1,000 par. Its discount rate is Libor + 2%. The discount rate for fixed cash flows is 2% a. What is the price of this floater if the coupon is Libor + 2%? b. What is the price of this floater if the coupon is Libor + 1%?What is the discount yield, bond equivalent yield, and effective annual return on a $1 million Treasury bill that currently sells at 93.375 percent of its face value and is 70 days from maturity? (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your percentage answers to 3 decimal places. (e.g., 32.161)) Discount yield Bond equivalent yield Effective annual return % % %
- A one year zero coupon treasury bond yields 4.83% and a two year zero coupon treasury yields 4.88%. What is the expected 1 year interest rate 1 year from now, assuming no-arbitrage pricing and no liquidity premium? Enter answer in percents to 2 decimal places. For example, enter 14.15 for 14.15%.Suppose the 1-year spot rate is 0.8%, and that a 2-year 1.5% annual coupon, a 3-year 2% annual coupon bonds are trading at par ($100). Calibrate a 2-year binomial interest rate model, assuming that interest rate volatility ?σ is 10%. What is the lowest rate at t=2?Bond A makes semi-annual interest payments of $30. Bond B makes an annual payment of $50. All else equal, which one has the lower coupon rate? Select one: a. B b. A=B c. A