(Group Project 1) S2‚ 2013 Lixiong Guo Due Date: Due in tutorial in Week 5 In this data exercise‚ you and your group members will examine the performance of the Expectation Hypothesis using real data and make forecasts for the future. You are required to complete the following tasks to earn credits for this assignment. Part I: (1) Go to the Reserve Bank of Australia (RBA) website‚ find the statistic section‚ and then download the data file named “Zero-Coupon Interest Rates - Analytical
Premium Bond 1920 1922
Chapter 14 Bond Prices and Yields Multiple Choice Questions 1. The current yield on a bond is equal to ________. A. annual interest divided by the current market price B. the yield to maturity C. annual interest divided by the par value D. the internal rate of return E. none of the above A is current yield and is quoted as such in the financial press. Difficulty: Easy 2. If a 7% coupon bond is trading for $975.00‚ it has a current yield of ____________ percent. A. 7.00 B. 6.53 C. 7.24
Premium Bonds Bond
Bonds and Their Valuation After reading this chapter‚ students should be able to: • List the four main classifications of bonds and differentiate among them. • Identify the key characteristics common to all bonds. • Calculate the value of a bond with annual or semiannual interest payments. • Explain why the market value of an outstanding fixed-rate bond will fall when interest rates rise on new bonds of equal risk‚ or vice versa. • Calculate the current yield
Premium Bond Bonds
Wilcox Bond Yields‚ Returns‚ Risks‚ and Duration • • • • • Bonds and Loans Yields and Returns Price Volatility and Risk in Default-Free Bonds Measuring Interest Rate Risk Duration: Types‚ Calculation‚ Meaning‚ Uses • Next Time: Chapter 11 re: Duration Week # 2 January 28‚ 2014 1 Coming Soon! What We Did 1. 2. 3. 4. Week # 2 January 28‚ 2014 2 Yield to Maturity (YTM): A Result‚ Not a Cause! • YTM = percentage rate that equates (known) bond price to PV of
Premium Bond Bonds
ESTION 1． 2.24 When the money ($1000-($3000-$2000)) lost from one contract‚ margin call will be have. This could happen when the price of the wheat increase by (1000/ 5000) =$0.2 the price of wheat must increase to (4.5+0.2) = $4.7 per bushel for there to be a margin call. $1‚500 can be withdraw from the margin account‚ this will happen if the futures price fall to (1‚ 500 / 5‚000) = $0.3 to (4.5 – 0.3) $42 per bushel. 4.25 (a) the six-month zero-coupon bond rate is calculated
Premium Futures contract Bond Forward contract
Federal Funds Rate Affects 10 Year Treasury Bond Yields ______________________________________________________________________ I. Introduction The Federal Open Market Committee raised the federal funds target interest rate from the historically low 1% to 1.25% at its meeting in June 2004. Macroeconomic theory tells us that long-term interest rates tend to move in the same direction‚ and generally in concert with‚ shortterm interest rates (Abel 2005). So‚ we would expect the yield on a long-term
Premium Bond Economic growth Economics
perpetual bond is currently selling for RS. 95/-. The coupon rate of interest is 13.5%. The approximate discount rate is 15%. The value of the bond and the YTM is: (a) Rs. 90/- and 14.2% Value is (13.5*15%=90) and YTM is ((13.5/95)*100=14.21%) (b) Rs. 100/- and 13.5% (c) Rs. 90 and 15% (d) Rs. 90/- and 13.5% 902. In 2001‚ Meridian Ltd. has issued bonds of Rs. 10‚000/-each due in 2011 with a 14% per annum coupon rate payable at the end of each year during the life of the bond. If the required
Premium Bond Bonds
BOND PROBLEM SOLUTIONS 1. Six years ago‚ The Corzine Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium. Today‚ Corzine called the bonds. The bonds originally were sold at their face value of $1‚000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price. PV = 1000; N = 6; PMT = 140; FV = 1090; CPT I/Y I/Y = 15.02% 2. You just purchased
Premium Bond Finance Stock
Using present value to value bonds A bond‚ from the perspective of the person issuing the bond is a form of long term debt. In the hands of the person who has acquired the bond it is an asset. The agency issuing the bond agrees to pay a fixed sum of money to the holder of the bond for a period of years and then‚ at the end of that period‚ to pay back the face value of the bond. Bonds can be issued by a variety of agencies/companies: 1. Municipal bonds: issued by cities‚ states
Premium Bond Net present value Bonds
1) Using the following returns‚ calculate the arithmetic average returns‚ the variances and the standard deviations for X and Y. Year X Y 1 8% 16% 2 21 38 3 17 14 4 -16 -21 5 9 26 2) You bought one of the Great White Shark Repellant Co’s 8 per cent coupon bonds one year ago for $1030. These bonds make annual payments and mature six years from now. Suppose you decide to sell your bonds today ‚when the required return on the bonds is 7 per cent .If the inflation rate was 4
Premium Investment Rate of return Interest