International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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If you note the following yield curve in The Wall Street Journal, what is the one-year forward rate for the period beginning one year from today, 2f1 according to the unbiased expectations theory? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Maturity
Yield
One day
1.16
%
One year
1.68
Two years
1.92
Three years
2.03
one Year Foward rate = %
If you note the following yield curve in The Wall Street Journal, what is the one-year forward rate for the period beginning one year from today, 2f1 according to the unbiased expectations theory? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Maturity
Yield
One day
1.16
%
One year
1.68
Two years
1.92
Three years
2.03
A 91-day Treasury Bill (T-Bill) with a face value of £72,000,000 is currently trading at a discount rate of -0.087% and has 70 days left until it matures.
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Please calculate the current market price of the T-Bill and calculate its equivalent yield. Explain the difference between the discount rate and the equivalent yield.
please calculate the market price of the T-Bill if there are only 30 days left to maturity instead, assuming there is no change in the equivalent yield. Explain the relationship between the market price and time to maturity.
Please calculate the market price of the T-Bill with 30 days until maturity, if there is a 25 basis points hike in interest rates. Explain the relationship between market price and yield.
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