A trader enters into a FRA to receive at the rate 4% on the principal of $1,000,000 over the period 60 to 90 days. If, after 30 days, the 30-to-60 day FRA rate is 5% and the quoted yield on a 30 day bill is 4%, then what is the value of the FRA? O 819.22 O-815.87 O 815.87 O-819.22
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- Suppose a trader opens a short position in two rice futures contracts. Each contract is for 5,000 kilograms. The initial margin is TZS 2,000,000 per contract, and the contract expires in 100 says. Suppose the future price decreases by TZS 500 per Kilogram per day for the first 10 days, then increases by TZS 750 per kilogram per day for the next 5 days. REQUIRED: Estimate the following: The initial margin to be deposited with clearing house The total gain/loss due to price decreases The total gain/loss due to price increase The balance in the trader's margin a/c after 15 dayA company is planning to sell its 90-day commercial paper to investors by offering an 8.4 percentyield. If the face value of a three-month Treasury bill is GHS1000 which is also selling at GHS950,the credit risk premium is estimated to be 0.6 percent, and there is a 0.4 percent tax adjustment,then what is the liquidity premium on the commercial papeIf the treasury bill has $10.000 par value 200 days to maturity and is quoted: Bid: 0,720 Ask: 0,630 then: a) The price for the buyer is $9.965 b) The price for the seller is $9.965 c) The price for the buyer is $9.970 d) The price for the seller is $9.960
- Assume you are treasury manager in a company and the company requires $1,000,000 ($1 Million) in 6 months for the duration of 1 year. You can finance this need by trading zero-coupon bonds, i.e., buying or selling zero-coupon bonds or go to bank to organize a forward contract. The bank quotes a forward rate 14% per annum semi-annual compounding applied from 6 months to 18 months. The prices of zero-coupon bonds with maturity 6 months and 12 months are listed in the above table and the price of zero-coupon bond with maturity 18 months is calculated in Part II. Ignoring all the other costs and given all the information above, are you going to accept the bank’s offer? Justify your decision.On March 1, 2018, you purchased $1.000.000 face value of a bond that pays an annual coupon of $79 every January 1st. The yield-to-maturity is currently 6%. You agreed with the seller on a price of 96.5% Your back office, which is responsible for sending the correct cash amount, asks you a) how much money they should exactly send to the seller? (assume 365 days calendar basis)? b) if the amount would increase if the yield-to-maturity would increase to 9%? Why? c) if the amount would increase if the coupon rate would be 8%?A trader sells two July futures contracts on frozen orange juice. Each contract is for the delivery of 20,000 pounds. The current futures price is 150 cents per pound, the initial margin is $5,000 per contract, and the maintenance margin is $3,000 per contract. What price change would lead to a margin call? Under what circumstances could $8,000 be withdrawn from the margin account?
- A company enters into a short futures contract to sell 25,000 units of a commodity for 70 cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. What is the futures price per unit above which there will be a margin call? O 76 cents O 66 cents 74 cents O 78 centsA bank has issued a six-month, $1.7 million negotiable CD with a 0.46 percent quoted annual interest rate (iCD, sp). Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,699,000. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.7 million face value CD.A company enters into a short futures contract to sell 8,000 units of a commodity for $0.50 per unit. The initial margin is $5000 and the maintenance margin is $3000. When will there be a margin call? (Round your answer to the nearest cent.) a. $0.63 b. $0.72 c. $0.65 d. $0.75
- Suppose 6-month Treasury bills are trading at a YTM of 1%, 12-month T-bills are trading at a YTM of 3%. If 18-month Treasury notes with a coupon rate of 4% 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.The futures contract for settlement in 4 months is trading at F0 = $6.35 and the cash market is trading at S1 = $6.42. The 4-month interest rate on a continuously compounded basis is 2 percent. What is the arbitrage trade that is available, the transactions and the arbitrage profit? Buy now at S1 with borrowed money and enter a short forward contract at Fo. At time T deliver the underlying, receive F0 and pay back the loan plus interest. Net profit is: $0.4200 Buy now at S1 with borrowed money and enter a short forward contract at Fo. At time T deliver the underlying, receive F0 and pay back the loan plus interest. Net profit is: $0.0280 Sell short S1 and invest proceeds at r and enter long a forward contract at Fo; at time T receive the underlying for F0, cover the short and also collect the principal plus from the bank. Net profit is: 0.1129A commercial bill with a face value of $100,000 and 270 days to maturity is purchased with a yield to maturity of 4.65 per cent per annum. After the bill has been held for 110 days it is sold at a yield of 4.5 per cent per annum. What rate of return was earned by the original holder of the bill; that is, what is the holding period yield? Show your working.