Suppose that the current spot interest rate for a term

Assignment Help Financial Management

Reference no: EM131087785

The cash futures price of a 3-month zero coupon bond with a face value of $100 for delivery in 9.38 months from now is 96.31 dollars. Suppose that the current spot interest rate for a term of 12.38 months is 15.75 per cent per annum. Assume continuous compounding to answer the following:

1. The forward rate of interest for period 9.38 months to 9.38+3 months.

2. The spot rate of interest for period 0 to 9.38 months.

3. The current fair value of a 9.38-month zero coupon bond with $100 face.

Reference no: EM131087785

Questions Cloud

Assuming they use the percentage of sales method : Gerentology Associates, a highly profitable company, is considering 2 growth stategies, one that will achieve sales growth of 20% in one year, and the other that will achieve 20% growth in sales but over a 4 year time frame. Assuming they use the per..

Opens new product line and requires initial outlay : A company is considering a 5-year project that opens a new product line and requires an initial outlay of $78,000. The assumed selling price is $97 per unit, and the variable cost is $56 per unit. Fixed costs not including depreciation are $21,000 pe..

Estimate current financing gap and financing requirement : Obtain any bank’s 10K report and estimate the current financing gap and financing requirement. How large is the requirement as a percentage of assets? What does your estimate tell you? Explain.

The dividend will continue to grow indefinitely : A company just paid a dividend of $1.50 per share. You expect the dividend to grow 14% over the next year and 9% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 6% per year. ..

Suppose that the current spot interest rate for a term : The cash futures price of a 3-month zero coupon bond with a face value of $100 for delivery in 9.38 months from now is 96.31 dollars. Suppose that the current spot interest rate for a term of 12.38 months is 15.75 per cent per annum.

Decisions made concerning operations : How are decisions made concerning operations, investing in specific projects while excluding others, make or buy manufacturing decisions, vendor/supplier selection, and pricing of products sold? moving from buying products from suppliers to manufactu..

Any other stockholders own controlling interest : Suppose your company is very successful and you cash out most of your stock and turn the company over to an elected board of directors. Neither you nor any other stockholders own a controlling interest (this is the situation at most public companies)..

Smallest expected loss in the coming year with probability : DW Co. stock has an annual return mean and standard deviation of 14 percent and 35 percent, respectively. What is the smallest expected loss in the coming year with a probability of 16 percent?

How much money needs to be in the account by the time : Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $62,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.7% per year simple interes..

User Account

All Pages