A Treasury STRIP is purchased for $942 to mature at $1,000 in 3 years. Assuming annual compounding, what is its yield-to-maturity? Group of answer choices 2.0% 2.5% 3.0% 3.5% 4.0%
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- Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)Kk201. An asset produces $150 in two years, and $250 in four years, and the current price has been calculated toreflect a rate of return of 9% annually. Using the definition that convexity = second derivative of pricedivided by price, find the convexity of this asset evaluated at the annual yield rate of 9%.The current yield curve for treasuries is as follows: Maturity (years) YTM 1 0.5% 2 0.9% 3 1.01% Compute the forward rate for the third year. Enter your answer as a decimal, rounded to 4 decimal places.
- determine the market value of 6 million of long-term debt, the parameters are that for 14 years, payments of 300,000 (5% of 6 million)will be made, concluding with a 15th year of payment of 6,300,000 (interest and principle) and that 12% is representative interest rate. what is the present value of the cash flows?The 1-year spot rate is 8%p.a. effective. The term structure of 1-year effective forwardratesisasfollows: attimet=1therateis7%,attimet=2therate is 6%, at time t = 3 the rate is 5%. (a) Determine the term structure of spot rates. (b) A fixed income security pays £10 annual coupons and it is redeemed after 4 years for £100. Compute its price at time t = 0.If you purchase a $10,000 short-term (90-day) negotiable certificate of deposit for $9,740, what is the discount yield, the simple yield, and the true compound yield? Assume 360 days per year for discount yield and 365 days per year for simple and compound yield. Round your answers to two decimal places. Discount yield: % Simple yield: % Compound yield: %
- An investment will pay $20,400 at the end of the first year, $30,400 at the end of the second year, and $50,400 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use the appropriate factor(s) from the tables provided. Required: Determine the present value of this investment using a 9 percent annual interest rate.An ARM is made for $220,000 for 30 years with the following terms: Initial interest rate = 7 percent Index = 1−year Treasuries Payments reset each year Margin = 2 percent Interest rate cap = None Payment cap = 5 percent increase in any year Discount points = 2 percent Fully amortizing; however, negative amortization allowed if payment cap reached Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2 = 7 percent; (BOY) 3 = 8.5 percent; (BOY) 4 = 9.5 percent; (BOY) 5 = 11 percent. Required: a. Compute the payments and loan balances for the ARM for the five-year period. b. Compute the yield for the ARM for the five-year period.(a)An investment is offered whereby £1000 is invested immediately, £2000 is invested in exactly threeyears’ time followed by a further investment of £3000 after a further threeyears. The investment is due to return £10000 in ten years’ from now. (i)Write down the equation of valuefor the investment (ii) Estimatethe yield on the investment. (b) (i)Calculate the present value, at a rate of interest of 6.5% per annum effective, of anannuity where £5000 is paidat the end of the first year, £4,800 is paid at the end ofthe second year, £4,600 is paid at the end of the third year and so on, with paymentsdecreasing by £200 per annum until the payment stream ends afterof 10 years. (ii)What would the payments be for an investment with the same present value, with equal payments every month?
- with end of the month contributions of 251.33 a tsfa is expected to pass 90000 in value after 15 years and 5 months. determine the nominal rate and effective rates of return used in the projection. Round to the nearest 0.01. Must show workA K100, 000 Treasury bill currently sells at 95% of its face value and is 65 days from maturity. Calculate the following for the Treasury bill:a. the discount yield.b. the investment yield.A $90,000 investment is made. Over a 5-year period, a return of $30,000 occurs at the end of the first year. Each successive year yields a return that is $3,000 less than the previous year’s return. If money is worth 5%, use agradient series factor to determine the equivalent present worth for theinvestment.
