the rate of 7% per year. Its yield to maturity is 4.4805% p.a., semi-annual compounding. What are the spot interest rates for the terms of 1 year and 2 years?
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- The term structure of interest rates has the following annual effective rates of interest for zero-coupon bonds. Maturity (Year) Annual Effective Yield on Zero-Coupon Bond 1 0.05 0.0525 0.055 3 At time 0, find the one-year forward one-year deferred and one-year forward two-year deferred annual effective forward rates of interest. For an interest only loan, find the level interest payment at the end of each year for three years that has the same present value as the payments based on the forward rates at those times.The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond. Year One-Year Bond Rate Multlyear Bond Rate 1 2.00% 2.00% 2 5.00% 5.00% 6.00% 7.00% 7.00% 9.00% 9.00% 11.00% The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places) 111 = 121= ly= 141. = 151 135 %The following table represents the term structure of spot interest rates: Rate (% p.a., semi- annual compounding) 3.30% Term (years) 0.50 1.00 1.50 2.00 2.50 3.00 3.92% 4.35% 4.52% Consider two bonds - Bond A and Bond B. Bond A has a maturity of 1.5 years and pays coupons semi-annually at the rate of 10% per year. Its yield to maturity is 3.9050% p.a., semi- annual compounding. Bond B has a maturity of 3 years and pays coupons semi-annually at the rate of 7% per year. Its yield to maturity is 4.4805% p.a., semi-annual compounding. What are the spot interest rates for the terms of 1 year and 2 years?
- You have the following information regarding the bond ABC. Semiannual $25 payments YTM 8% Maturity (in 4. years) Par value $1,000 Let's assume the modified duration of this bond is 4. Based on this assumption and using the modified duration, estimate the price of the bond after a 65-basis-point decrease in interest rates.You have the following information regarding an annual bond. What is the modified duration of this bond? Payment $40 YTM 6.5% Maturity (in years) 19 Par value $1,000B. 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% P105.00
- The following information relates to a forward contract written on a bond: Bond price = $95 Maturity = 1 year Coupon 1, paid in 6 months = $3; Coupon 2, paid immediately prior to maturity of forward = $2 Riskless rate of interest = 5% What is the forward price? A) $94.43 B $85.77 c) $94.79 D) $93.79A P1000.00, 6-year, 12% bond is offered with a premium of P80.00. If interest is payable semi-annually, determine a) the current yield; (Ans. 11.11%) b) the yield to maturity. (Ans. 10.44%)The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond. One-Year Bond Rate 2.00% 3.00% 4.00% 7.00% 10.00% 11 =% 21 = 131 The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.) 141 151 = = = Year 1 2 3 4 5 % % % % Multiyear Bond Rate 2.00% 3.00% 6.00% 8.00% 11.00%
- The following table gives the prices of bonds Bond Principal ($) Time to maturity Annual coupon ($) Bond Price ($) 100 (years) 0.5 100 1 100 100 1.5 2 The bonds provide coupon are semiannual coupon bond a. Calculate 6-month, 12-month, 18-month and 24-month zero rates. 1567 0 98 100 100 101 b. What is the forward rate for the six-month period beginning in 12 months. c. Estimate the price of a two-year bond providing annual coupon of 7% annually.Assume that a 5-year bond pays interest of $110 once a year (1 payment / year) and will mature for $1,000. Also assume that the yield to maturity on this bond is currently 12 percent. Given this information, determine the duration of this bond. Answer truncated to 2 decimal places. For example, if your answer is 3.267, enter "3.26".The table below shows current and expected future one year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond. Year One - Year Bond Rate Multiyear Bond Rate 12.00% 2.00% 23.00% 5.00% 34.00% 8.00% 46.00% 11.00% 59.00% 12.00% Part 2 The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.)