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- Use the following spot rates to answer the following questions. Maturity Spot rate (%) 1 year 4.93% 2-years 4.47% 3-years 4.12% 5-years 3.84% 10-years 3.68% Assume that Citibank is offering to sell a one-year Treasury bill next year with a rate of 5% (i.e., you can enter into a contract today to lock in a 5% return on a one-year security purchased/sold next year). Based on the above spot rates, does the Citibank offer generate any arbitrage opportunities? If so, compute the total $ profits that can be generated from this opportunity, specifying the steps you would take. Assume you will borrow/invest $1,000. O Yes: profit of $5.55/ $1000 borrowed. O No: $0 O No: Loss of $5.55/ $1000 borrowed.based on Citibank's offered rate. O Yes: $55.55/$1000 borrowed.Assume that you are preparing an amortization table for a three-year note with a stated and yield rate of 10% and 12%, respectively. Interest is payable every yearend. Which of the choices would be true? a. C4 - D4 = B4 b. E1 - D2 = E2 c. E3 + D3 = E4 d. B5 - D5 = C5Compute the price of a 5-year 6.4% coupon with par value if 100$ that pays interest annually assuming that the discount rate is 4.8%
- Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 6.10% r2 = 6.00% r3 = 5.80% r4 = 5.50% What are the following forward rates? Hint: f1, k refers to a forward rate for the period beginning in one year and extending for k years. fk,1 refers to a forward rate beginning in k years and extending for 1 year. f1,1 : f1,2 : f1,3 : f2,1: f3,1 :3. The 1-year spot rate is 8%p.a. effective. The term structure of 1-year effective forward rates is as follows: at time t = 1 the rate is 7%, at time t = 2 the rate is 6%, at time t = 3 the rate is 5%. (a) Determine the term structure of spot rates. (b) A fixed income security pays £10 annual coupons and it is redeemed after 4 years for £100. Compute its price at time t = 0.Consider the following spot interest rates for maturities of one, two, three, and four years. r₁ = 4.3% 2 = 4.9% √3 = 5.6% r4 = 6.4% What are the following forward rates, where fkn refers to a forward rate beginning in k year(s) and extending for n year(s)? f2,1 = ? f3,1 = ? f2,2 = ?
- A ten-year floating-rate note (FRN) has coupons referenced to 3-month pound LIBOR, and pays coupon interest quarterly. Assume that the current 3-month LIBOR is 4 percent. If the risk premium above LIBOR that the issuer must pay is 12.5 basis points, the next period's coupon payment on a £1,000 face value FRN will be Group of answer choices £31.25. £82.50. £165.00. £10.31.consider the following spot interest rates for maturities of one, two, three, and four years. r1=4.1%, r2=4.5% r3=5.2% r=6.0% what are teh following forward rates, where fk.1 refers toa forward rate beginning in the k years and extending for the 1 year?Give typing answer with explanation and conclusion An 8% coupon bond with annual payments (face value = 10,000) currently trades at par. Its annual Macaulay duration is 7.86 years. Suppose yield goes down by 0.27%. Calculate the approximate dollar change in price using duration. Assume annual compounding. Round your answer to 2 decimal places.
- Suppose that a 10-year T-note is purchased with a face value of $20,000 and a coupon rate of 3.4% (a) What is the total return of this investment? (b) What is the average rate of retum? (a) The total return is $ (Simplity your answer.) (b) The average rate of return is%. (Simplify your answer. Round to two decimal places as needed.)Refer to the following table: (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) 1 2 3 4 5 Zero- coupon YTM 4.00% 5.50% 5.50% 5.00% 4.50% What is the forward rate for year 2 the forward rate quoted today for an investment that begins in one year and matures in two years)? Note: Use at least four decimal places in all intermediate calculations. Question content area bottom Part 1 The forward rate for year 2 is enter your response here %. (Round to two decimal places.)Suppose that an 8% coupon CPI-linked bond paying annual coupons is issued with a face value of $100 and a term of five years. Suppose that inflation, as measured by the CPI, is 2% during first two years and then 5% for the remaining three years. What are the face value and the coupon payment for the second year? Use the editor to format your answer