Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) Let the given 2 banks:

Bank 1 has assets composed only of ten-year, 12% coupon, $1 million loan with 12% yield to maturity. It is financed with the 10-year, 10 percent coupon, $1 million CD with the 10% yield to maturity.

Bank 2 has assets composed only of 7-year, 12%, zero-coupon bond with present value of $894,006.20 and maturity value of $1,976,362.88. It is financed by 10-year, 8.275% coupon, $1,000,000 face value CD with yield to maturity of 10%.

All securities except zero-coupon bond pay interest annually

i) If interest rates increase by 1% (100 basis points), how do values of assets and liabilities of each bank change?

ii) What accounts for differences between two banks’ accounts?

2) What is the duration of the 5-year, $1,000 Treasury bond with 10% semi-annual coupon selling at par? Selling with yield to maturity of 12%? 14%? What can you conclude about relationship between duration and yield to maturity? Plan the relationship. describe why does this relationship exist?

3) By using a Spreadsheet to compute Yield to Maturity. Determine the yield to maturity on given bonds; all have maturity of 10 years, face value of $1,000, and coupon rate of 9% (paid semi-annually). The bond’s present market values are $945.50, $987.50, $1,090.00, and $1,225.875, respectively.

Market Value    Total Payments    Periodic coupon payment    Face Value

945.500               20                    451,000                              9.87%
987.500               20                    451,000                              9.19
1,090.000            20                    451,000                              7.69
1,225.875            20                    451,000                              5.97

The Yield to Maturity will be?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914224

Have any Question? 


Related Questions in Basic Finance

Assignment lasa standards appraisalin this assignment you

Assignment: LASA: Standards Appraisal In this assignment, you will research current financial accounting standards, both U.S. and international, on goodwill impairment. You will write a report that analyzes the final dec ...

1 discuss uncertainty as it relates to the overall

1. Discuss uncertainty as it relates to the overall logistical performance cycle. Discuss and illustrate how performance cycle variance can be controlled. 2. What is the logic of designing echeloned logistical structures ...

Suppose that you wish to buy stock and protect yourself

Suppose that you wish to buy stock and protect yourself against a downside movement in its price. You consider both a covered call and a protective put. What factors will affect your decision? You have inherited some sto ...

1 in general would a falling rate of market interest cause

1. In general, would a falling rate of market interest cause the price of an MPT security to increase or decrease? Would the increase or decrease be greater if the security was issued at a discount? Would an increase in ...

In 2009 daryl bought a life insurance policy on his life

In 2009, Daryl bought a life insurance policy on his life with a death benefit of $200,000. He named his wife Melanie the beneficiary of this policy. In 2012, Daryl created an ILIT with Melanie as beneficiary, and transf ...

1 what is the connection between the truth-in-lending act

1. What is the connection between the Truth-in-Lending Act and the annual percentage rate (APR)? 2. What is the effective borrowing cost? 3. What is meant by a nominal rate of interest on a mortgage loan? 4. What is the ...

During a congressional committee hearing at which goldman

During a Congressional Committee hearing at which Goldman Sachs CEO Lloyd Blankfein testified, Senator David Pryor of Arkansas asked Blankfein, "Why would clients believe in Goldman Sachs?" Blankfein replied that Goldman ...

What is meant by break even drivers identify two important

What is meant by break even drivers? Identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

1 what changes to disaster recovery programs were being

1. What changes to disaster recovery programs were being proposed in 2009? 2. Investigate how civil defense and emergency management evolved in your state or city. Look at such factors as when it was created, its origina ...

1 what do you see as the biggest challenges in conducting a

1. What do you see as the biggest challenges in conducting a brand audit? What steps would you take to overcome them? 2. Pick a brand. See if you can assemble a brand inventory for it.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro