Suppose we observe the prices of 7-year zero-coupon (with a face value of $91.36) and year 6-to-7 forward rate as follows: P(0,7) = $90.9991 and f(6,7) = 0.00064117%. Extract the 7-year continuously compounded yields y(0,7):
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- Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 2.00% per year. What is the real risk-free rate of return, r*? The cross-product term should be considered , i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)Using both duration and convexity, estimate the new price of a 5-year 9% coupon bind with par calue of $100 and yueld of 9% that experiences a 100-basis-point increase in yield. $96.14 $96.10 $96.16 $96.12You have the following Yield to maturities on Zero-coupon T-bills for 1000 par: Year YTM 1 2.1% 2 2.2% 3 2.4% 4 2.8% 5 3.0% What is the implied 2nd year's future short rate? Could you explain how to find R2 or how to calculate it?
- Suppose 1-year T-bills currently yield 7.40% and the future inflation rate is expected to be constant at 3.00% per year. What is the real risk-free rate of return, r*? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic average. a. 4.40% b. 7.40% c. 10.40% d. 7.62% e. 5.20%Suppose GE plans to issue a note that matures in 2 years and has a 3.67% coupon rate. If the market yield is 4.91%, what is the market price?The level of the Syldavian market index is 23,000 at the start of the year and 27,500 at the end. The dividend yield on the index is 5.5%. What is the return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) If the interest rate is 8%, what is the risk premium over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) If the inflation rate is 9%, what is the real return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
- In a given securities market, an investment at time t=0 of £95 generates a return of £105 at time t=2 years. However, an investment of £95 at time t=2 (which is agreed from the outset) generates a return of £108 at time t=5 years. Given that the 5-year par yield is 5.3%, calculate, to two decimal places, the current price of a 5-year bond of £10,000 nominal paying coupons at a rate of 4.5% per annum and redeemed at 95%.The level of the Syldavian market index is 21,100 at the start of the year and 25,600 at the end. The dividend yield on the index is 4.3%. a. What is the return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If the interest rate is 7%, what is the risk premium over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. If the inflation rate is 9%, what is the real return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)Assume the following yield to maturities: one year YTM 6%, two year YTM 7%, and three year YTM is 5%. A) What is today’s price of a three year zero coupon bond, 1000 par?
- 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?The level of the Syldavia market index is 21,900 at the start of the year and 26,400 at the end. The dividend yield on the index is 4.7%. What is the return on the index over the year? If the interest rate is 6%, what is the risk premium over the year? If the inflation rate is 8%, what is the real return on the index over the year? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places.Suppose the stock price is $ 95 and the continously compounded interest rate is 7 %. a) What is the price of a 6 - month forward price, assuming dividends are zero? $ ? b) If the 6 - month forward price is $ 96.55, what is the annualized forward premium? % ? c) If the 6 - month forward price is $ 96.55, what is the annualized continous dividend yield? % ?