The prices of a sample of treasury strips

Assignment Help Financial Management
Reference no: EM13921620

The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity. Calculate the interest rate offered by each of these strips.

Years to Maturity Price, %

1 97.652%

2 94.151

3 90.344

4 86.280

a. What is the 1-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate %

b. What is the 4-year rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate %

c. Is the yield curve upward-sloping, downward-sloping, or flat? Upward-sloping Downward-sloping Flat

d. Is this the usual shape of the yield curve? Yes No

Reference no: EM13921620

Questions Cloud

Assume that all interim entries were correctly recorded : On January 1, 2018, Laird Corp. called the bonds. Assume that all interim entries were correctly recorded.
Insured personal casualty losses : insured personal casualty losses (arising from one casualty). Wally also had $42,000 AGI for the year before considering the casualty.
Perfectly competitive industries advertise : Question 1 Why would perfectly competitive industries advertise even though individual firms do not? Question 2 We could state correctly that the minimum characteristic necessary to distinguish among price­making firms is:
Discuss the meaning of perfect competition : Discuss the meaning of perfect competition. Analyse the conditions in which the firm and the industry will be in equilibrium in the short and long run under perfect competition.
The prices of a sample of treasury strips : The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity. Calculate the interest rate offered by each of these strips. s the yield curve upward-sloping, downward-sloping, or flat?
Pro forma budget analysis and capital budget analysis : Discuss the differences between Pro Forma budget analysis and capital budget analysis. In your forecasting for your new company which one will you use and why?
Ow many workers and machines should it optimally employ : If Canon needs to supply 60,000 units of cameras per month, how many workers and machines should it optimally employ? What are the total cost and average cost of producing the quantity given in (a)?
Discounted payback method of capital appraisal : Discounted payback method of capital appraisal ignores cash flows beyond the discounted payback period. The net present value is found by discounting all positive cash flows at the project’s cost of capital. The project is accepted if the IRR is less..
Possible outcomes for two players : Question 1 The accompanying payoff matrix depicts the possible outcomes for two players involved in a game of Rock, Paper, Scissors. If a player receives a payoff of 1, the player wins;

Reviews

Write a Review

Financial Management Questions & Answers

  Stock and its dividend yield based on that price

GE : open price 25, closing price 26 , bid 25.50, offer 26, days range 25-26, 52 week range 20-28, volume 2 million shares , avg. daily volume 1million shares, market cap 200 billion, earnings per share $1.50, dividend $1.10. Tell me the price an inv..

  How to get the holding period return for a 980 selling

how to get the holding period return for a 980 selling security that purchased fiver years before at 798?prove that

  Calculate the equivalent uniform annual worth of the machine

A machine costs $73,000 initially and will have a salvage value of $10,000 after 9 years. It will also have an operating cost of $21,000 in year 1, with 5% continuing increases each year thereafter to year 9. The MARR is 19% per year. Compute the Equ..

  What are the consequences of unethical behavior

Discuss in your own words what are ethics in corporate finance and what are the consequences of unethical behavior?

  Take a position in treasury bond futures contracts

Green Backs Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 96-240. Green Backs thinks interest rates will go down over the period of investment. Should the bank go long or short on the futures contr..

  Organizations build and manage prisons

Which of the following levels of government and/or organizations build and manage prisons?

  What is the approximate yield to maturity

A 13-year bond pays 9 interests on a $1000 face value annually. If it currently sells for $1,300, what is its approximate yield to maturity? What is the approximate yield to maturity for a 11-year bond that pays 12 interest on a $1000 face value annu..

  Mccormick corporation issued note

McCormick Corporation issued a 4-year, $63,000, 5% note to Greenbush Company on January 1, 2014, and received a computer that normally sells for $49,605. The note requires annual interest payments each December 31. The market rate of interest for a n..

  Calculate the coupon rate of bonds

Quick Loans has outstanding bonds that have 16.5 years to maturity. The YTM is 7.2 percent and the current price is $935. These bonds make semiannual payments. Calculate the coupon rate of these bonds.

  Retained earnings decreased by what amount

Masterson Company has 420,000 shares of $10 par value common stock outstanding. During the year Masterson declared a 15% stock dividend when the market price of the stock was $36 per share. Three months later Masterson declared a $.60 per share cash ..

  What was DEFs Corps Return on Equity

Last year, DEF Corporation had sales of $315,000, net income of $17,832, and year-end total assets of $210,000. The firm's debt-to-assets ratio was 42.5%. What was DEF's Corp.'s Return on Equity (ROE)?

  Finance the rest at a lower interest rate

A buyer thinks he can come up with a down payment of $1,300 per acre and he hopes to finance the rest at a lower interest rate. Approximately how low must the interest rate be for the net profit of $150 per acre to meet the loan payments on a loan of..

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