Certainty to investors in the floating rate note

Assignment Help Financial Management

Reference no: EM13890172

Consider the auction of 2-year Floating Rate Notes in April 2014. As we saw in class, the notes are priced at par and investors receive face value at maturity. Coupon interest payments are indexed to the 13-week T-bill and are made quarterly (July, October, January, April). The April 2014 13-week T-bill rate (known at the time of the auction) was 0.030% and the spread (determined at auction) was 0.069%.

Once the spread was determined at the auction, which cash flows were known with certainty to investors in the Floating Rate Note?

Given the 13-week T-bill rates in 2014 and 2015 below, what are the July 2014, October 2014, January 2015, April 2015, July 2015 and October 2015 coupon interest payments per $100 face value?

Date 13-week T-bill Rate

April 2014 0.030%

July 2014 0.025%

October 2014 0.020%

January 2015 0.020%

April 2015 0.025%

July 2015 0.050%

October 2015

Reference no: EM13890172

Questions Cloud

Taxable equivalent yields of tax exempt municipal bonds : Consider the following yields on bonds with approximately 20 years to maturity: Calculate the taxable equivalent yields of the tax exempt municipal bonds for the following marginal tax rates: 10%, 15%, 28%, 35%. For which of these tax rates will an i..

How much should she set aside today for the purchase : Three years from now, Barb will purchase a laptop that will cost 2,250. Assume that Barb can earn 6.25% (compounded monthly) on her money. How much should she set aside today for the purchase? Round off to the nearest $10.

How much money must you put in a savings account today : If you want to have $875 in 32 months, how much money must you put in a savings account today? Assume that the savings account pays 16% and it is compounded monthly (round to the nearest $10).

Recommend buying or renting-rental costs-annual costs : Based on the following data, would you recommend buying or renting? Rental Costs- Annual costs- Annual rent $7,380, Insurance $145. Security deposit $ 650. - Buying Costs- Annual mortgage payments $9,800 ($9,575 is interest), Property taxes $ 1,780, ..

Certainty to investors in the floating rate note : Consider the auction of 2-year Floating Rate Notes in April 2014. As we saw in class, the notes are priced at par and investors receive face value at maturity. Coupon interest payments are indexed to the 13-week T-bill and are made quarterly (July, O..

Mortgage lender-the current mortgage rate : You are a mortgage lender. The current mortgage rate for a 30-year fixed loan is 3.875%. For the sake of this assignment, let's assume this is an extreme balloon loan and no prinicpal payments are made until maturity, so annual interest is based off ..

Calculate portfolio beta : Calculate Laurel’s portfolio beta for last year and for this year. Assume that the changes in investment (value) come from changing stock prices rather than buying and selling shares. What has happened to the riskiness of Laurel’s portfolio? Should s..

Determine the total monthly mortgage payment for covington : Ben Covington is buying a condo. They will obtain a $220,000, 30 yr. mortgage at 5 percent. Their annual property taxes are expected to be $1,800. Property insurance is $480 a year, & the condo association fee is $220 a month. Based on these items, d..

Cash disbursements when preparing cash budgets : The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when preparing cash budgets for the next twelve months. ABC has beginning cash on hand of $20,000 and wants to maintain this minimum cash level throughou..

User Account

All Pages