Continously compounded zero rate

Assignment Help Financial Management

Reference no: EM13927771

The 6-month zero rate is 6% with semiannual compounding. The price of a 1-year bond that provides a coupon of 10% per annum semiannually is 96. What is the 1-year continously compounded zero rate?

a. 14.15%

b. 14.00%

c. 13.80%

d. 14.25%

e. 15.00%

Reference no: EM13927771

Questions Cloud

Why is it important to be able to assume that demand : Why is it important to be able to assume that demand will be level during each six month period?If the vendor is willing to offer a discount of $ 10 per order for ordering in multiples of 50 units would you advise the manager to take advantage of t..

What is wrong with estimate of his gross profit margin : Tony works full-time as a computer-repair technician who makes on-site repairs for individuals and small businesses. He says his gross profit margin is 94% because last year his total revenues were $100,000 and his expenses were $6,000. “I’m actually..

Calculates the present value of redemption value to equal : [Actuarial Math] On 1/1/2014, PJ buys a 10,000 par value bond that pays annual coupons with the 1st coupon due on 12/31/2014. The redemption value is 10,000. PJ pays 10,000 for the bond. At issue, PJ calculates the duration of the bond to equal 15.83..

Zero-coupon bond assuming full immunization is met : [Actuarial Math] Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year ze..

Continously compounded zero rate : The 6-month zero rate is 6% with semiannual compounding. The price of a 1-year bond that provides a coupon of 10% per annum semiannually is 96. What is the 1-year continously compounded zero rate?

Actuarial math-etermine the modified duration of the payment : An annuity-immediate has level payments for n years. The average time of the payments using the method of equated time is 7 years. Determine the modified duration of the payments if the annual effective rate of interest is 5%.

What is the third-party-payer system in your organization : What is the third-party-payer system in your organization? How does this system impact your organization?

The firms total-debt-to-total-assets ratio : In 2012 Whole Foods had sales of $74 billion and a net income of $17 billion, and its year-end total assets were $121.31 billion. The firm's total-debt-to-total-assets ratio was 45.3%. Based on the DuPont equation, what was the Microsoft ROE in 2012?..

Calculate the weighted average cost of capital : Based on the information below, calculate the weighted average cost of capital. Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 10%. They had 25-year terms and $1,000 face..

User Account

All Pages