After setting aside the required reserves, the bank decides to invest the remaining amount of cash. The bank invests £15 million in a coupon bond issues by UK Treasury. What remains is loaned out. The coupon bond of point (e) pays a coupon of 4% per year, paid semi-annually. It has 2 years to maturity. If the current Yield-to-Maturity is 3.5% semi-annually, what is the price of the bond?
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After setting aside the
The coupon bond of point (e) pays a coupon of 4% per year, paid semi-annually. It has 2 years to maturity. If the current Yield-to-Maturity is 3.5% semi-annually, what is the price of the bond?
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- The bank invests £15 million in a coupon bond issues by UK Treasury f) The coupon bond of point £15m pays a coupon of 4% per year, paid semi-annually. It has 2 years to maturity. If the current Yield-to-Maturity is 3.5% semi-annually, what is the price of the bond? g) A year later, the Bank of England is worried by rising inflation and announces its intention to raise interest rates. This announcement immediately sends the Yield-to-Maturity of bond in point (f) surging 300 basis points. Recalculate the price of the bond. h) What is the Holding Period Return recorded on the bond position over the past year? i) What is the Profit-and-Loss recorded on the bond position in Pound Sterling (£)? j) Record the result of point(g) in the T-accounts. k) If your result is a loss, please discuss if the bank has enough equity capital to support that loss. l) Please discuss the Basel Capital accords. Focus particularly on capital requirements and their calculation.Even though most corporate bonds in the US make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000 euros, 27 years to maturity, and a coupon rate of 3.6% paid annually. If the yield to maturity is 3.2%, what is the current price of the bond in euros?Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $25,950,000, with the promise to buy them back at a price of $26,000,000. a. Calculate the yield on the repo if it has a 5-day maturity. b. Calculate the yield on the repo if it has a 15-day maturit
- Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 6 years to maturity, and a coupon rate of 8.9 percent paid annually. If the YTM is 10.9 percent, what is the current bond price in euros? Can this be solved only with excel or I can use a financial calculator?A bank has assets of $500,000,000 and equity of $40,000,000. The assets have an average duration of 5.5 years, and the liabilities have an average duration of 2.5 years. An 8-year fixed-rate T-bond with the same coupon as the fixed-rate on the swap has a duration of 6 years, and the duration of a floating-rate bond that reprices annually is one year. The bank wishes to hedge its balance sheet with swap contracts that have notional contracts of $100,000. What is the optimal number of swap contracts into which the bank should enter? 2,500 contracts. 2,760 contracts. 13,800 contracts. 3,200 contracts. None of the above.Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 27 years 2 to maturity, and a coupon rate of 3.6 percent paid annually. If the yield to 3 maturity is 3.2 percent, what is the current price of the bond in euros? In excel
- Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon rate of 8.2 percent paid annually. If the YTM is 10.2 percent, what is the current bond price in euros?Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 7.3 percent paid annually. If the yield to maturity is 8.4 percent, what is the current price of the bond?Suppose a bank enters a repurchase agreerment in which it agrees to sell Treasury securities to a correspondent bank at a price of $9.99,838 with the promise to buy them back at a price of $10.000,073. Calculate the yield on the repo if it has a 6-day maturity. (write your answer in percentage and round it to 2 decimal places)
- A U.S. Government T-bond matures in 24 years and has a face value of $100. The bond has a coupon rate of 4% paid semi-annually (the next coupon is due in 6 months). The yield on the bond is 5%. If coupons are re-invested at 2.8332% per annum, then how much interest is earned on re-invested coupons over the life of the bond? Calculate the interest as a percentage of the total cash flows received at maturity by the bondholder. Option: A. 16%, B. 17%, C. 18% & D. 19%A commercial bank invests in a loan with a current market value of $600,000 and a maturity of 3 years. The bank partially funds the loan by issuing a zero coupon bond with a maturity (principal) value of $450,000 and a duration of 3 years. The current market rate is 7% and interest rates are expected to increase by 1%. Which of the following statements is true? (a) The current equity value of the position is $150,000 and if interest rates increase the equity value will increase. (b) The current equity value of the position is $232,666 and if interest rates increase the equity value will increase. (c) The current equity value of the position is $232,666 and if interest rates increase the equity value will decrease. (d) The current equity value of the position is $150,000 and if interest rates increase the equity value will remain the same. (e) None of the given answers. The current equity value of the position is $232,666 and if interest rates increase the equity value will remain the…Even though most corporate bonds in the World make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. A Zambian company issues a bond with a par value of K1,000, 15 years to maturity, and a coupon rate of 8.4 percent paid annually. If the yield to maturity is 7.6 percent, what is the current price of the bond?
