Calculate the price that you can sell your treasury note

Assignment Help Finance Basics
Reference no: EM133664202

Problem

Consider a $1000 face value 3-year treasury with 2.5% annual coupon and a yield of 1.3%.

Suppose that after one year and after receiving one coupon payment, you decide to sell your treasury note. Consider the following two scenarios:

Scenario A: interest rates have fallen to 1%.
Scenario B: interest rates have risen to 2%.

I. Calculate the price that you can sell your treasury note for under scenario A and the associated rate of return when you sell your treasury note given Scenario A.

II. Calculate the price that you can sell your treasury note for under scenario B and the associated rate of return when you sell your treasury note given Scenario B.

Reference no: EM133664202

Questions Cloud

Does this give you any reason to think anything could be : Does this give you any reason to think anything could be wrong with the dog? If so, what condition(s) could this be
Explain how this bone contributes to overall movement : Explain how this bone contributes to overall movement and support in the body. Bones in Motion: Explore the role of the skeletal system in facilitating movement
Xplain the endospore and why it is a challenge : Explain the endospore and why it is a challenge in sterilization and What steps are necessary in the prevention of Listeriosis?
What is the total retirement fund they will need to support : They are also assuming a 25-year retirement period. What is the total retirement fund they will need to support their retirement income goal?
Calculate the price that you can sell your treasury note : Calculate the price that you can sell your treasury note for under scenario A and associated rate of return when you sell your treasury note given Scenario A.
Identify two social and environmental determinants of health : Identify two social and environmental determinants of health that impact pathogenesis. For each of the two diseases, identify a minimum of two treatment
Explain how the lymphatic system might be affected : Explain how the lymphatic system might be affected by pneumonia in a pregnant woman(in other words, relate the respiratory system to the lymphtic/immune
Calculate the price of the treasury note : Calculate the price of the treasury note. Is this treasury note selling at a discount or premium? Explain.
What is a mechanistic explanation of this : activity of the sympathetic nervous system can lead to vasoconstriction of some blood vessels and vasodilation of others. What is a mechanistic explanation

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain how human emotions influence people in investment

Market anomalies are not always explained by the efficient market hypothesis. Behavioral finance has a number of theories to help explain how human emotions influence people in their investment decision-making processes.

  There is no counterparty risk on the cds the annualized

a six-year cds on a aa-rated issuer is offered at 150bp with semiannual payments while the yield on a six-year annual

  Discussion on the scenarios

When the 56 year old organizer of Gulf & Western, Corporation died of a heart attack, the stock price immediately jumped from $18.00 a share to $20.25, a 12.5 percent increase.

  How would this information help you to perform

How would this information help you to perform your job duties? Why did you choose this example?

  How can this be a profitable strategy

The implication of delta hedging (in the case of selling options) results in buying shares when the price goes up, and then selling shares when the price goes

  What is the price per share of equity under given plan

Haskell Corp. is comparing two different capital structures. Plan I would result in 14,000 shares of stock and $95,000 in debt.

  Calculate the after-tax cost of debt

Case A. Assume Venture Healthcare issued $80 million worth of $1000 par value bonds. The company's bonds have a 12% coupon rate with annual payments, and a 10-

  Assignment on dynamic hedging

Suppose that a stock price is currently $20 and that a call option with an exercise price of $25 is created synthetically using a continually changing position

  What is bfont production cost per door stopper

In September, Bfont expect to produce 100,000 door stopper. Assuming no structural changes, what is bfont production cost per door stopper for September?

  Conducting business in the nation

Research Question 2[SBC(oB1]: How are these elements and dimensions integrated by locals conducting business in the nation?

  What is the firms effective cost of borrowing

Lacey's has an average collection period of 32 days and factors all of its receivables immediately at a 1.1 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

  Determine the number of new shares

McLeggon Ltd has 4 million common shares outstanding and long-term debt with a market value of $12 million. The Board of Directors has asked you to investigate

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd