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Because you believe that the zero-curve will shift upward and decrease the bond price, you decide to use a reverse repo trade to short the bond. Let's suppose that a repo dealer quotes you a special repo rate of 2% and you borrow 100 units of the Treasury bond (which you then sell on the market as part of your reverse repo transaction).
(a) Draw a picture of the initial transactions in the repo trade.
(b) If the zero-curve shifts up by one percentage point, what is the value of the Treasury bond in part 1?
(c) What is your net payo_ to unwinding the repo trade tomorrow? Recall that you need to buy the bond and sell it to the repo dealer at the prespeci_ed price.
At a 6% rate of return, how much do you need to save each year to accumulate the down payment? If you need 25%, and the rate of return is 5%, how much do you need to save each year?
If it matures in 15 years and your required rate of return is 12 percent, what is the effective value of the bond?
In a sample of 1000 U.S. adults, 150 said they are very confident in the nutritional information on restaurant menus. Four U.S. adults are selected at random without replacement. (Adapted from Rasmussen Reports) (a) Find the probability that all f..
ABC Inc.'s stock is currently selling for $40.7 per share. The company just paid its first annual dividend of $4.65 a share. The firm plans to increase the dividend by 4.5 percent per year indefinitely. What is the firm's cost of equity?
A profit of $500,000? d.Assume tha 20 percent of hospital's inpatient days come from a managed care plan that wants a 25 percent discount from charges.should the hospital agree to the discount proposal?
Describe the competitive strategies used Starbucks main competitors. Which of these strategies are the most effective?
1. You are working on an Excel table and realize that you need to add a row to the middle of your table. What is one way to do this?
For each of the scenarios below, explain whether or not it represents a diversifiable or an undiversifiable risk. Please consider the issues from the viewpoint of investors. Explain your answer.
A stock has an expected return of 0.09, its beta is 1.63, and the expected return on the market is 0.07. What must the risk-free rate be? (Hint: Use CAPM)
What are three things which need to be considered when developing product strategies?
What was the catheterization lab's profit for a new cardiac catheterization lab that was constructed at Have a Heart Hospital?
Assuming the bond pays no cash during the year, which of the following is closest to the expected return on the bond?
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