Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Principal and Interest Payments for a Treasury Inflation Protected Security Time Inflation in Year Just Ended Nominal return Real retum Coupon Payment Par Value $1,000.00 1,030.00 $61.80 1,040.30 1,050.70 Second Year 62.42 63.04 % ** % Principal Repayment $1,050.70 Third Year 0 0 % % Total Payment $ 61.80 62.42 1,113.75
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- Interest rates determine the present value of future amounts. (Round to the nearest dollar.) Read the requirements. View the Present Value of $1 table. View the Future Value of $1 table. View the Present Value of Ordinary Annuity of $1 table. View the Future Value of Ordinary Annuity of $1 table. Requirement 1. Determine the present value of seven-year bonds payable with face value of $91,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. (Round intermediary calculations and final answer to the nearest whole dollar.) Present Value 91000 When market rate of interest is 12% annually C When market rate of interest is 14% annually Requirement 2. Same bonds payable as in requirement 1, but the market interest rate is 16%. (Round intermediary calculations and final answer to the nearest whole dollar.) Present Value When market rate of interest is 16% annually Requirement 3. Same bonds payable as in requirement 1, but the market interest…The interest rate on one-year Treasury bonds is 1.1 percent, the rate on two-year T-bonds is 1.3 percent, and the rate on three-year T-bonds is 1.5 percent. Using the expectations theory, compute the expected one-year interest rate in the second year (Year 2 only). Round your answer to one decimal place. _________ % Using the expectations theory, compute the expected one-year interest rate in the third year (Year 3 only). Round your answer to one decimal place. _________ %Revise your worksheet assumptions as indicated below and then answer the questions that folllow: Face amount Stated rate Number of years Market rate Ⓒ Discount O Premium Required: 1. Was the bond issued at a discount or a premium? Date $3,050,000 2. Complete the first four rows of the amortization schedule. (Round your answers to 2 decimal places.) June 30, 2021 December 31, 2021 June 30, 2022 December 31, 2022 8% 10 9% Cash Paid Interest Change in Carrying Expense Value Carrying Value
- Use the information in the table below for this question. All the interest rates are annual percentage rates (APRS). в Annual Yields U.S. Treasury Bonds as of October 23rd, 2018 A. Maturity I Month 3 Month Today 2.21% 4 2.33% 6 Month 2.48% 1 Year 2 Year 6. 2.67% 2.89% 8. 3 Year 2.95% Calculate the annual the forward rate of 3-month T-bills based on the 3-month and 6-month treasury yields. Which of the following Excel formulas is correct? (1+85)/(1+B4)-1 ((1+85)/(1+B4/2)-1) 2 ((1+B5/2)/(1+B4/4)-1)4 =((1+85/2)/(1+B4/4)-1)A Treasury bond that you own at the beginning of the year is worth $1,020. During the year, it pays $32 in interest payments and ends the year valued at $1,030.What was your dollar return and percent return? (Round "Percent return" to 2 decimal places.)Calculate the present value (principal) and the compound interest (in $). Use Table 11-2. Round your answers to the nearest cent. CompoundAmount Term ofInvestment NominalRate (%) InterestCompounded PresentValue CompoundInterest $18,500 18 months 4 semiannually $ $
- If investors are to earn a 3.7% real interest rate, what nominal interest rate must they earn if the inflation rate is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Inflation Nominal Interest Rate a. Zero b. 4.7% c. 6.7% Rate % % %B. Complete the information below using Bonds. Redemption Value (F) Conversion per year (m) Bimonthly Coupon Payments (k) Bond Rate (r) 11. 18% P7.50 P680 Quarterly 11% 12. P900 Quarterly 12.8% 13. P1,300 Bimonthly 12% 14. 15. Annually 15% P105.00Give typing answer with explanation and conclusion 1- Imagine the bond above displayed the following details: $10,000 Matures: January 31, 2030; Interest of $200 payable June 30 and December 31 of each year. Can you calculate the annual effective interest rate for this bond? a)2% b)4% c)6% d)One cannot tell.
- Determine the price of a single bond given the following information. Round your final answer to two decimal places. For example, if your answer is $89.12, enter 89.12 with no currency symbol. 4.39% Cost of Debt (Kd) The company is expected to pay the following forecasted CFFD (Cash Flows For Debt): Year 1: $50.00 interest payment Year 2: $50.00 interest payment Year 3: $50.00 interest payment Year 4: $50.00 interest payment Year 5: $50.00 interest payment The company will also pay the bond's face value of $1,000.00 at the end of year 5. The company faces a 25% tax rate. Type your answer...Find the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 8% . 144.20% 1.94% 36.05% 7.77% b. Nominal interest rate compounded monthly that is equivalent to 3.5% compounded quarterly. 31.78% 2.65% 3.49% 0.29% c. Nominal interest rate compounded monthly that is equivalent to 6% compounded annually. 5.84% 1,214.64% 0.49% 101.22%Consider the following information for a period of years: Long-term government bonds Long-term corporate bonds Inflation Arithmetic Mean 7.8% a. Long-term government bonds b. Long-term corporate bonds 7.9 3.5 a. What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 4.25% %