How much of the 2-year zero coupon bond do we need

Assignment Help Financial Management

Reference no: EM132020060

Suppose there are two bonds, a 10-year zero coupon bond and a 2-year zero coupon bond. Currently, the discount rate, y, is 4%. Suppose we are short $1000 in par value of the 10-year zero coupon bond.

How much of the 2-year zero coupon bond do we need to buy to be approximately immunized from changes in interest rates?

Reference no: EM132020060

Questions Cloud

How much do you have to deposit today to make these withdraw : Your savings account pays an annualinterest rate of 1% on all deposited funds. How much do you have to deposit today to make these withdrawals?

Video or online presentation of the annual report : COM201 – Business Communications - Vietnam Maritime University - Online Presentation to company stakeholders of the annual report of ONE of two companies

Presentation of the annual report to company stakeholders : COM201 – Business Communications - preparing and delivering, by yourself, a Video or Online Presentation of the annual report to company stakeholders

How much would the trader get : Explain how, with trade, Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn while Iowa can end up with 40 million bushels.

How much of the 2-year zero coupon bond do we need : How much of the 2-year zero coupon bond do we need to buy to be approximately immunized from changes in interest rates?

Evaluate the optimal present value of the timber a : What is the optimal time (t*) to cut the timber? What is the optimal present value of the timber A*(t)?

What is your revised estimate of the expected rate of return : A stock with a beta of 0.8 on IP and 0.4 on IR currently is expected to provide a rate of return of 11%.

What would its cost of equity be if it took on the average : Suppose Visa Inc.? (V) has no debt and an equity cost of capital of 9.2 %. The average debt-to-value ratio for the credit services industry is 13.2%.

How many contracts do you buy or sell : The multiplier on Treasury note futures is $100,000. How many contracts do you buy or sell?

User Account

All Pages