Provide the quote with required convention fixed maturity

Assignment Help Financial Management

Reference no: EM132020044

Assignment

Suppose you want to provide a quote for a Treasury bond that matures in 2 years and pays semi-annual coupons of 3%. The next coupon payment are in 6,12,16 and 24 months. Assume that prices of US treasury bills and US treasury bonds are given by:

Maturity(years)	Coupon($ semiannual)	Cash Price
0.25	na	$99.46
0.5	na	$98.82
1.00	2.250	$99.65
1.50	2.250	$99.26
2.00	2.500	$99.11

a) deduce the spot curve (zero rates) assume spot rates are semi annually compounded

b) compute the price of the required Treasury bond

c) provide the quote with the required convention fixed maturity

added information to previous question after clarification was sought from professor i believe i can find the rates using 100=99.46 * e^R*0.25 is this the right way to go about solving for rates?

And than find the PV of coupon payments of the 3% bond discounted by the rates found above?

Reference no: EM132020044

Questions Cloud

How can the fed achieve the goal by altering the yield curve : How can the Fed achieve this goal by altering the yield curve? Should the Fed buy or sell securities in the market? Securities of what maturity?

Explain heuristics and accounting information : Define Conceptual framework and a detailed understand of the qualitative characteristics and for general purpose financial report

What does your value function look like graphically : Your friend the Joker gives you two newly issued dollar coins on your birthday. In terms of value, how much did you just gain?

The expected return-beta relationship in this economy : Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 8%, and all stocks have independent firm-specific components.

Provide the quote with required convention fixed maturity : Suppose you want to provide a quote for a Treasury bond that matures in 2 years and pays semi-annual coupons of 3%.

Identify your best guess for the rate of return on the stock : If industrial production actually grows by 7%, while the inflation rate turns out to be 8%, what is your best guess for the rate of return on the stock?

What amount of additional funds will wall-e need from source : If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund?

What proportion of your portfolio must be invested in asset : Suppose that you want to create a portfolio that includes two assets, X and Y. The standard deviations of X and Y are 9% and 0% respectively.

Calculate the required return on equity for this firm : Swamp & Sand's current dividend is $1.7 per share. Analysts expect the firm's growth rate of 7% per year to continue indefinitely.

User Account

All Pages