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

1 what is the relationship between the price of a financial

1. What is the relationship between the price of a financial asset and the return that investors require on that asset, holding other factors constant? 2. Define the following terms commonly used in bond valuation: (a) p ...

Use the value of the linear correlation coefficient to

Use the value of the linear correlation coefficient to calculate the coefficient of determination. What does this tell you about the explained variation of the data about the regression line? About the unexplained variat ...

Explain why an options time value is greatest when the

Explain why an option's time value is greatest when the stock price is near the exercise price and why it nearly disappears when the option is deep-in- or out-of-the-money? Critique the following statement, made by an op ...

Read and study the following experimental designs for eacha

Read and study the following experimental designs. For each: a. Identify the number of factors and the number of levels within each of the factors. Identify whether each of the factors is between participants or repeated ...

It is sometimes suggested that a floating exchange rate

It is sometimes suggested that a floating exchange rate will adjust to reduce or eliminate any current account deficit. Explain why this adjustment would occur. Why does the exchange rate not always adjust to correct a c ...

1 distinguish among observational physiological and

1. Distinguish among observational, physiological, and self-report measures. 2. What do researchers interested in psychometrics study? 3. Why do researchers use converging operations? 4. Distinguish among nominal, ordina ...

1 define reaction time task completion time and

1. Define reaction time, task completion time, and interbehavior latency. 2. Give three examples (other than those in the chapter) of measures of duration. 3. What is interrater reliability, and what are some ways in whi ...

1 consider the four principles of ethical research with

1. Consider the four principles of ethical research with human participants outlined in the chapter. What procedures are used by behavioral scientists to help ensure that their research conforms to these principles? 2. W ...

Which financial variable must be multiplied by the net

Which financial variable must be multiplied by the net profit margin ratio in order to calculate the return on assets ratio? What is the numerical value of the debt ratio if the debt-to-equity ratio is equal to 4?

1 locate a research report that uses a factorial design

1. Locate a research report that uses a factorial design. Identify the independent and dependent variables and the levels of each of the factors, and indicate whether each factor is between participants or repeated measu ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen