+1-415-315-9853

info@mywordsolution.com

## Finance

 Basic Finance Corporate Finance Financial Management Financial Econometrics Portfolio Management Risk Management Public Finance Business Law & Ethics

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

### If a companys dividends are expected to decline is it

If a company's dividends are expected to decline, is it possible to still use the constant growth dividend discount model? What is the relation between the expected return on a stock and the stock's dividend yield? Conce ...

Assume that main line of business is expected to receive \$1,000,000 exactly 1.5 year from today (t=1.5 years). You do not expect any cash outflow for the next 6 months (i.e. from t = 1.5 to 2.0 years). Use the following ...

### 1 what is a factorial design why are factorial designs used

1. What is a factorial design? Why are factorial designs used more frequently than one-way designs? 2. How many independent variables are involved in a 3 x 3 factorial design? How many levels are there of each variable? ...

### If there are costs associated with financial distress how

If there are costs associated with financial distress, how may this affect the capital structure decision of a company? Why do we adjust for taxes in determining the cost of debt, but not for the costs of preferred stock ...

### 1 when and why would nonprobability sampling methods be

1. When and why would nonprobability sampling methods be used? 2. Under what conditions is sampling bias likely to occur, what are its effects on generalization, and how can it be avoided? 3. Indicate the similarities an ...

### Consider a us investor who owns a portfolio of japanese

Consider a U.S. investor who owns a portfolio of Japanese securities worth 160 million japanese yen. In order to hedge to currency risk, he considers buying currency puts on yen instead of selling futures contracts. In P ...

### Write a 750 to 1000 word paper in your paper include the

Write a 750 to 1000 word paper. In your paper include the following: Complete questions A through J for the Mini Case involving Shrieves Casting Company. Please complete the paper in actual paper format including an intr ...

### What information explicit and implicit can be derived from

What information (explicit and implicit) can be derived from financial statement analysis? Does the standardization required by GAAP add greater validity to comparisons of financial data between companies and industries? ...

### 1 what is the difference between a debt instrument and an

1. What is the difference between a debt instrument and an equity? 2. Define and briefly explain the following terms: a. Face value b. Coupon c. Coupon rate d. Current yield e. Maturity 3. Explain in which category of de ...

### State and explain two reasons why firms hedgea major bread

State and explain two reasons why firms hedge? A major bread maker is planning to purchase wheat in the near future. Identify and explain the appropriate hedging strategy? Explain how the implied repo rate on a spread tr ...

• 13,132 Experts

## 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.

### 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