A) You have the following information about prices today, month=0. 2-month t-bill, interest rate 0.02 6-month t-bill, interest rate 0.025 What will the forward rate between 2 month and 6 month be??
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A) You have the following information about prices today, month=0.
2-month t-bill, interest rate 0.02
6-month t-bill, interest rate 0.025
What will the forward rate between 2 month and 6 month be??
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- Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?You see the following rate “X”: 0.3% compounded weekly A) What is the APR of X? B) What are the APY of X? C) When compared with rate “Y” that has EAR=16%, which rate would you pick if you were asked to borrow money at that rate for one year? Why?If the 60-day interest rates (simple, p.a.) are 3% at home (usd) and 4% abroad (eur) and the spot rate moves from 1.000 to 1.001: What is the return differential, and what is the corresponding prediction of the change in the forward rate?
- If the interest rate per day is 0.014%, then what is the annual rate?1) what is the discount yield on a 9-month T-bill sold for RM925, assuming there are 365 days in a year?Assume the following: Spot USDBRL = 5.0500 1YR USD Money Market Rates = 1.50% 1YR BRL Money Market Rates = 9.00% What is the 1YR USDBRL forward rate? (Recall that Money Market Rates are quoted as annualized rates)
- Find the present values using the given discount rates. Payments of $1,000 at 3 months from now, $1,500 at 9 months from now, and $2,000 at 1 year from now, 5.5% rateWhat annual interest rate is earned by a 20-week T-bill with a maturity value of $2,900 that sells for $2,863.64? The annual interest rate is %??Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 2.50%, E(2r1) = 3.75%, E(3r1) = 4.25%, E(4r1) = 5.75% Using the unbiased expectations theory, calculate the current (long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities
- What’s the equivalent interest rate to the terms 3/20, n/60? In other words, what is the effective annual rate that is "given" to a customer for this cash discount? (Use 365 days.) HINT: Use the I = P x R x T formula where R = I/PT and choose some value for the gross amount of the invoice (i.e $1,000). Label (%) and round to the nearest whole percent.How do you calculate the present and future value in months? Example: Calculate the FV of : Investment: 500$ Interest: 5% Time: 5 monthsAssume inflation is 0.21% per month. Would you rather earn a nominal return is entered0.72% per month, compounded monthly, or a real return of 6.44% APR, compounded annually? (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return 0.72% per month is _______ (Type your answer in decimal format. Round to six decimal places.) Part 2 The nominal annual rate for the real return of 6.44% APR is _____ (Type your answer in decimal format. Round to six decimal places.) (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the ▼ nominal return compounded monthly real return compounded annually option over the ▼ nominal return compounded monthly real return compounded annually option.