The current spot interest rate for term

Assignment Help Financial Management
Reference no: EM131176440

The cash futures price of a 3 month zero coupon bond with a face value of $100 for delivery in 11.62 months from now is 95.19 dollars. Suppose that the current spot interest rate for a term of 14.62 months is 20.25% per annum. Assume continuous compounding to answer the following:

1. The forward rate of interest for period 11.62 months for 11.62+3 months

2. The spot rate of interest for period 0 to 11.62 months

3. The current fair value of a 11.62 -month zero coupon bond with $100 face.

Reference no: EM131176440

Questions Cloud

Calculate expected dividend yield-growth rate in dividends : Return on Common Stock You buy a share of The Ludwig Corporation stock for $18.20. You expect it to pay dividends of $1.06, $1.15, and $1.2476 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $27.01 at the end of 3 years. C..
Contrast the three different theories of money demand : Compare and contrast the three different theories of money demand. Given the quantitative theory of money, What happens to real GDP if the money supply is cut in half, velocity is stable and prices are sticky? What happens to prices if the money supp..
What is rate of return you earned on japanese securities : One year ago you converted $1,000 to yen at the rate of 125 yen to $1 and invested in Japanese securities. You just sold the securities for 137,500 yen. The current exchange rate is 111 yen to $1. What is the rate of return you earned on the Japanese..
Compounds the financial charges semi-annually : The ABC Construction Company is considering the purchase of a diesel power shovel to improve its productivity. The company finances the purchase by borrowing from a local bank with no origination fee. The pricipal will be repaid with the compounded i..
The current spot interest rate for term : The cash futures price of a 3 month zero coupon bond with a face value of $100 for delivery in 11.62 months from now is 95.19 dollars. Suppose that the current spot interest rate for a term of 14.62 months is 20.25% per annum.
Electronics is midsized electronics manufacturer : Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. Over the years, the company expanded into manufacturing and is now a reputable manufact..
Save any money between today and retirement : Now assume that you just got a call from your rich Uncle Dylan and he is going to give you a large sum of money for your birthday today. how much money does Uncle "D"need to give you today so that you would not have to save any money between today an..
Determine whether the investment plan is viable or not : A corporation plans to invest in a small project which costs a cone-time expenditure of $600,000 at year 0 and offers an annual return of $160,000 each in the next five years. It intends to finance this project by borrowing from a local bank which re..
What is the new par value per share and dividend per share : The company with the common equity accounts shown here has declared a 5-for-one stock split when the market value of its stock is $33 per share. The firm’s 75-cent per share cash dividend on the new (postsplit) shares represents an increase of 20 per..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the present value of the growing perpetuity

What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of one year and grows at a rate of 7% indefinitely?

  How much of medical expense deduction

Mike and Mindy Miller paid the following medical expenses during the year (all in excess of reimbursement). Hospital and doctor bills: $840 Medicine and drugs: $730 Hospitalization insurance premiums: $6,200 Medicine and drugs (for dependent mother, ..

  Cash dividend pay no cash dividends pay less dividends

According to the residual theory of dividends, if a firm's equity need exceeds the amount of retained earnings, the firm would borrow to pay the cash dividend sell additional stock to pay the cash dividend pay no cash dividends pay less dividends.

  What are the portfolio weights-expected return on portfolio

A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns 3.8 percent. (SHOW YOUR WORK) What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets ..

  Describe the scope of public finance

Describe the scope of Public Finance. Explain different philosophical approaches to the role of the government. Describe the size of the government sector in the U.S. List and explain the determinants of each demand curve and supply curve.

  Generate an additional cashflow after tax

The firm is considering the purchase of a new machine. The machine costs $31,500 and will produce an after-tax cash flow of $5481 per year at the end of each of the next 9 years. The disposal of equipment will generate an additional cashflow after ta..

  Rule making the food and drug administration

Rule Making The Food and Drug Administration (FDA), a federal administrative agency, is charged with enforcing the Food, Drug, and Cosmetic Act. This statute mandates that the FDA limit the amount of poisonous or deleterious substances in food.

  One of the big consulting firms

Suppose you work for one of the big consulting firms and Maytag has just hired your firm to tell them what to do in the case of the following: Maytag knows that they can produce a washing machine for $300, which covers all costs and profit. Based upo..

  Infrastructure overhead of implementing strategy process

Why do many organizations choose not implement this process? Do you believe the cost and infrastructure overhead of implementing the Orion Strategy Process is worth the benefits? Why or why not? Without performing all of the steps within the Orion St..

  Project with an expected cash inflow

Wilson, Inc., has a project with an expected cash inflow of $1 million at the end of Year 5. Wilson has a second project with an expected cash inflow of $200,000, to be received at the end of each year for the next five years. Required: If both proje..

  Securities is best after adjusting for tax and credit risk

You pay Federal tax at the rate of 32%, and the MA state tax at the rate of 6.25%. It is estimated that the US T-Bill has zero risk of default, the MA municipal has a 1.8% chance of default,and the back CD has a 2.3% chance of default. The quoted yie..

  What is the cost of a preferred stock

What is the cost of a preferred stock with a $100 par value that pays a $9.60 dividend per year? The security has a flotation cost of $3.37 and will be retired at its par value in 20 years 9.6% 5.9% 9.9% 10.6%

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd