On May 15, 2000 you enter into a 1-year forward rate agreement (FRA) with a bank for the period starting November 15, 2000 to May 15, 2001. You will receive the forward rate and pay the floating rate in the FRA. You know that currently the price of the 6-month zero coupon is $96.79 and the price of the 1-year zero coupon is $93.51.


a. What is the agreed-upon forward rate in the transaction?

b. What is the value of the forward at inception?

Answers

Answer 1

Answer:

a.

3.51%

b.

0%

Explanation:

a.

First, we need to calculate the YTM of 6 months zero-coupon bond by using the following formula

Price = Face value / ( 1 + YTM )^numbers of years

96.79 = 100 / ( 1 + YTM )^1

1 + YTM = 100 / 96.79

1 + YTM = 1.0331646

Now calculate the YTM of 1 Year zero-coupon bond

93.51 = 100 / ( 1 + YTM )^1

YTM = 1.0331646 - 1

YTM = 0.0331646

YTM = 3.31646%

YTM = 3.316%

1 + YTM = 100 / 93.51

1 + YTM = 1.06940

YTM = 1.06940 - 1

YTM = 0.06940

YTM = 6.940%

YTM = 6.94%

Hence the forward rate is calculated as follow

Forward rate = [ (1 + YTM of 1 year zero coupon bond ) / ( 1 + YTM of 6 months year zero coupon bond ) ] - 1 = ( 1 + 6.94% ) / ( 1 + 3.316% ) = [ 1.0694 / 1.03316 ] - 1 = 1.03508 - 1 = 0.03508 = 3.508% = 3.51%

b.

At the time of inception the formward rate is 0.


Related Questions

Miley, a single taxpayer, plans on reporting $30,475 of taxable income this year (all of her income is from a part-time job). She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability

Answers

Answer:

$1,600

Explanation:

Calculation to determine By how much will the income from the second job increase her tax liability

Based on the information given she had the amount of $10,000 as the additional taxable income which means that $9,000 out of the $10,000 will be taxed at 15% while the remaining $1,000 ($10,000-$9,000) will be taxed at 25% according to the single tax rate schedule

Increase in tax liability =($9,000 × 15%) + ($1,000 × 25%)

Increase in tax liability= $1,600

Therefore By how much will the income from the second job increase her tax liability is $1,600

Que consecuencias podria tener una subita caida del valor de las acciones para quienes compraban acciones con prestamos

Answers

La respuesta correcta para esta pregunta abierta es la siguiente.

No especificas el país o la Bolsa de Valores en específico, ni una fecha determinada, por lo que responderemos en términos generales.

Las consecuencias que podría tener una súbita caída del valor de las acciones para quienes compraban acciones con prestamos es que pierdan una gran parte del valor en lo que tenían invertido por la repentina caída de los precios en la Bolsa.

Además, si compraron las acciones con préstamos, la consecuencia también es que no van a tener la liquidez suficiente para poder enfrentar los pagos de esos préstamos o por lo menos, los pagos de los intereses, aunque no puedan pagar también al capital, para poder disminuir su deuda.

Este es el problema tan recurrente y grave que se presenta en los mercados de valores de cualquier Bolsa a nivel mundial. Es tan manipulable que cualquier variable hace que de repente el valor de una acción suba sin precedentes, pero al siguiente instante se desplome todavía más rápido sin mayor justificación válida.

are the costs related to the product that have to be paid regardless of the amount you sell.

A) Fixed cost

B) Opportunity costs

C) Variable costs

D) none of the above

Answers

Answer:

C) Variable costs

Explanation:

Homestead Co. reported the following in its statement of stockholders' equity on January 1, Year 4: Common stock, $10 par value, authorized 1,000,000 shares, issued 200,000 shares $2,000,000 Additional paid-in capital 600,000 Retained earnings 1,500,000 $4,100,000 Less treasury stock, at cost, 10,000 shares (180,000) Total stockholders' equity $3,920,000 The following events occurred in Year 4: March 1: 8,000 shares of treasury stock were reissued for $96,000. August 1: 5,000 shares of previously unissued common stock were sold for $15 per share. December 1: The distribution of a 2-for-1 stock split resulted in halving of the common stock's per-share par value. Homestead accounts for treasury stock under the cost method. Laws in the state of Homestead's incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared. The number of outstanding common shares at December 31, Year 4, should be

Answers

This question is to complex. In Order for this to be answerable you would need to put it into chunks

1. If you are the seller, how will you improve your product to make it saleable? 2. If you are a buyer, what are the things do you need to consider in buying a product? Why?

Answers

Answer: 1) The product should be what meets the customer's need; No one wants to buy a product and dump it in their homes, so it must meet their exact needs. 2) Customer service: asides selling great product, a great customer service would bring the client, sustain them and through them get referrals

3) Having a great sales plan or campaign which would register the products in the hearts of the client.

Explanation:

Selling is a skill on its own to be learnt, and there some things to consider to have good sales, here are the following;

1) The product should be what meets the customer's need; No one wants to buy a product and dump it in their homes, so it must meet their exact needs. 2) Customer service: asides selling great product, a great customer service would bring the client, sustain them and through them get referrals

3) Having a great sales plan or campaign which would register the products in the hearts of the client.

Things I'll consider while buying a product;

1) How good it is: products are meant to be enjoyed and not endured.

2) Customer service: having someone who understands the product very well would always make the client time keep returning

Location externalities (skilled labor force, supporting industries in place, etc.) are considered a __________ factor when choosing a location of production. A. Product B. Technological C. Country-specific D. Manufacturing

Answers

Answer:

Option C. is correct

Explanation:

Externality refers to the impact of market exchange on a third party that is a person who is external to the exchange.

Location externalities include skilled labor force, supporting industries in place, etc.

Location externalities are considered a country-specific factor when choosing a location of production.

So,

Option C. is correct

Terrance has just signed a contract with a bank to get a loan to buy a new house. What is TRUE about this contract? A. Both the bank and Terrance share power of attorney. B. Terrance has participated in a guarantee of gain. C. Both parties now have an obligation to their agreement. D. Terrance is required to submit a verbal agreement.

Answers

Answer: C. Both parties now have an obligation to their agreement.

Explanation:

When parties get into a contract, they have a legal obligation to each other to fulfill their part of the agreement or the other party will be able to seek redress in a court of law.

Terrance and the bank are now parties to an agreement to provide Terrence with a loan to buy a house. The bank will have to fulfill this obligation by giving Terrence the loan and Terrence will fulfill his side of the agreement by making payments as stipulated in the loan covenant.

Swinging Sammy Skor's batting prowess was simulated to get an estimate of the probability that Sammy will get a hit. Let 1 = HIT and 2 = OUT. The output from the simulation was as follows.
1 2 2 2 2 2 2 2 2 2 1 2 2 2 2 2 2 1 2 1 2 2 2 2 2 1 2 2 2 1 2 2 2 2 2 2 2 2 1 2 2 2
Estimate the probability that Sammy makes an out.

A. 0.929

B. 0.782

C. 0.833

D. 0.621

Answers

Answer:

I think its B!

Hope this helped! Good luck!! :)

Answer: B is the answer

Explanation:

Investments can help a business increase productivity by:

ANSWER: C. OFFERING THE BUSINESS MORE EFFICIENT WAYS TO MAKE GOODS

A. Making it possible for the business to ignore opportunity cost
B. Eliminating the need for any input when creating products
C. Offering the business more efficient ways to make goods
D. Creating goods outside the production possibilities curve

Answers

Answer:

c

Explanation:

when Offering the business more efficient ways to make and encourage the business can develop

Answer:

C. Offering the business more efficient ways to make goods

Explanation:

I just had my test

Why has globalization led to an
increasing income gap between rich and poor countries?

A. Laborers from developing countries migrate to developed countries in search of better-paying jobs.
B. The reduced production costs provided by low wages in developing countries enable companies to make larger profits.
C. Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies.
D. Countries with well-established infrastructure and productive capacities have more competitive industries.​

Answers

Answer:

A. Laborers from developing countries migrate to developed countries in search of better-paying jobs.

Explanation:

One way globalization can increase inequality is through the effects of increasing specialization and trade. Although trade based on comparative advantage has the potential to stimulate economic growth and lift per capita incomes, it can also lead to a rise in relative poverty.

Answer:

Countries with well-established infrastructure and productive capacities have more competitive industries.

Explanation:

took test

explain the effect of a lack of shortage of entrepreneurs in the economy ​

Answers

Explanation:

Lack of entrepreneurs will lead to lower jobs, innovative products and a decline in economy. By developing new technology, goods, and services, entrepreneurs help to fuel the economic growth.

why is cost price important in price determination?​

Answers

Answer:

The cost price is the price you buy a product for. You need to compare the cost price to the selling price to know whether you got a profit or loss (did you make money or did you not).

If you don't know the cost price, you don't know whether you have a profit or loss. Of course everyone wants a profit (make money) so to determine a selling price the cost price is important.

answer

The most important factor affecting the price of a product is its cost. ADVERTISEMENTS: Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the production, distribution and selling of the product. ... The price for a commodity is determined on the basis of the total cost.

How do worker organizations influence wages?
A. They fight for higher pay for workers.
B. They lower the market value of workers.
C. They enforce regulations raising the minimum wage.
D. They require workers to have more education.
SUBMIT

Answers

Answer:

A.

Explanation:

In many industries wages are linked to enterprise cost of living which ensures a fair wages to workers. The wage rates are directly influenced by cost of living of a place. The workers will accept a wage which may ensure them a minimum standard of living. Wages will also be adjusted according to price index number.

They fight for higher pay for workers is the way organizations influence workers for wages. In many businesses, wages are tied to the cost of living of the company, ensuring that workers are paid fairly.

What is wage employment?

In both the official and informal economies, wage employment encompasses any salaried or compensated position under contract to another person, organization, or company. Finding decent-paying work for those with impairments is often difficult.

Thus, option A, They fight for higher pay for workers is correct.

For further details about wage employment, click here:

https://brainly.com/question/14090792

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On average, for every $1.00 that is collected by the credit card companies in principal, how much is collected in interest and fees?

Answers

Answer:

On average for every $1.00, the credit companies collectection in total is 1.50.

Explanation:

On average for every $1.00, the credit companies collectection in total is 1.50.

please help me i reallu need your help

Answers

Answer: ok I can help but where is the question? :)

Explanation:

Answer:

what's the question??

..................._.....................

Kristina is tempted to get a credit card now that she is in college. What is one fiscally responsible reason for Kristina to get a credit card? A. She will be able to buy whatever she wants. B. She won’t have to carry cash everywhere. C. Price will no longer need to be considered when she makes purchases. D. She will receive a free tee-shirt when she opens the account.

Answers

Answer:

B because it is the only one except for d that cant be done using cash and d is just not it

Explanation:

Answer:

it would be B

Explanation: because you can definitely rule out D, C is definitely not it because you should still consider pricing with whatever you buy. With A it isn't a good reason because you may not have a lot of money on your card.

Which term defines all of the other options that are given up when a business makes one choice over another?

trade-offs
O limited resources
O diminishing returns
opportunity costs

Answers

Answer:

Trade-offs would be the correct term

After Joe and Stephanie placed an offer on a house, the realtor came back to tell them they had Consensus ad idem. What does this MOST likely mean for Joe and Stephanie? A. They should find a new realtor. B. They must look for a different home. C. They have to make a better offer. D. They have an accepted offer.

Answers

Answer: D because Consensus ad idem means to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract. Formation of a contract is initiated with a proposal or offer. So D.

Sorry if i'm wrong. Hope it helps

1. Visit a website for a company that sells products or services online. Then go to that company's
corporate website. Compare the product/service sales site with the corporate site. Describe at least three
differences between them.

Answers

Answer:

The company being examined here is Amazon.

Their corporate website is: aboutamazon.com/

while their product sales site is amazon.com

Explanation:

The various differences are:

1. the corporate is much easier on the eyes than the product sales website

2. the corporate website contains more information on the company and its corporate activities whilst the sales website is focused on the various categories of products available for sale by the company.

3. the sales website has e-commerce functionalities, the corporate does

Cheers

Miami Mutual Bank purchases a two-year interest rate cap for a fee of 3 percent of notional principal valued at $20 million, with an interest rate ceiling of 11 percent and LIBOR as the index representing the market interest rate. At the same time, Miami Mutual sells a two-year floor (8 percent) for a fee of 2 percent of the $20 million principal. Assume that LIBOR is expected to be 7 percent and 14 percent at the end of each of the next two years, respectively. What is this type of strategy called

Answers

Answer:

Interest Rate Collar

Explanation:

This strategy called the Interest Rate Collar.

The Interest rate collar is an option that is used to hedge the interest rate exposure. It protects the borrower from the risk of increasing the interest rate and also decided a floor declining rate by purchasing an interest rate cap.

In the given scenario the Miami Bank will receive when the interest rate crosses the cap of 11% and pay when there is a decrease below the floor rate of 8% on the principal value.

How much would Software C cost
you in the long run?
80% . $0
$[?]
Satisfaction
Not Satisfied
20%. $20,000
$5,000
Software C
Software D
$8,000
85% $0
Satisfaction
Not Satisfied
15%. $15,000

Answers

Answer: $8,000

Explanation:

If you're satisfied, the cost of software C is:

= 5,000 + 0

= $5,000

If you are not satisfied, the cost is:

= 5,000 + 20,000

= $25,000

You can then use the probabilities to calculate the expected total cost:

= (Probability of satisfied * Cost if satisfied) + (Probability of unsatisfied * Cost if unsatisfied)

= (80% * 5,000) + (20% * 20,000)

= $8,000

An example of a variable cost is


A) payroll

B) insurance

C) rent

D) labor

Answers

Your answer is Insurance

Answer:

labor

Explanation:

insurance is wrong on edge

There is a bond that has a quoted price of 110.547 and a par value of $2,000. The coupon rate is 7.05 percent and the bond matures in 19 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?

Answers

Answer:

the YTM of the bond is 127.55 %

Explanation:

The YTM of the bond is the Market return that similar Bond Holders expect from the bond.

This can be calculated using a Financial calculator as :

PV = - $ 110.547

FV =  $2,000

PMT =  $2,000 x 7.05 % x 1/2 = $70.50

N = 19 x 2 = 38

P/yr = 2

YTM = ???

Therefore, the YTM of the bond is 127.55 %

Explain the importance of scale of preference to individual​

Answers

Opportunity cost like other basic concepts of Economics – scarcity, scale of preference and choice is important to an individual who represents the consumer or household, or firm or productive unit and the government that form the three decision making bodies in an economy.

A scale of preference can be defined as the list of a person's needs or wants written in an order of importance. You will observe that the person puts his most important needs or wants at the top of the list.

A scale of preference is a list of goods and services (for example, shoes, socks, books, haircut, and so on) prepared for purchase in order of priority. It is a priority rating of all individual wants, according to their importance in one's valuation and the means to achieve or obtain them.

A soft currency is a currency that is easy to exchange for another currency.
O True
0 False

Answers

True I’ve been specialized in hard and soft currency

Knowledge Check 01 Byrd Corporation issued 5,000 shares of $0.05 par value common stock for $10 per share. Prepare the appropriate journal entry to record the stock issuance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answers

Answer and Explanation:

The journal entry to record the stock issuance is shown below:

Cash Dr (5,000 × $10) $50,000

       To Common stock $250 (5,000 × $0.05)

       To Additional paid in capital - common stock $49,750

(Being the issuance of the shares is recorded)

Here cash is debited as it increased the assets and common stock & additional paid in capital is credited as it increased the liabilities

Help needed ASAP! Will give brainliest;)

Ivan is starting his own pet store in his neighborhood. Where should he go to obtain a business license and permits?

A). County courthouse

B). Internal Revenue Service

C). Post office

D). Bank

Answers

Answer:

b

Explanation:

Answer:

Before opening up shop, all business owners need to obtain a business license from their state and perhaps even their local jurisdiction. Some states also require pet stores to obtain a specific pet shop license. The license application may ask you to list the types of animals you'll be selling and provide a detailed floor plan of the shop. Pet shop owners won't be able to operate their business until they get at least a general business license from their state if a pet shop license isn't required.

A is correct

Explanation:

Mark brainiest

Henry wrote 24 checks in April. The bank charges $0.15 a check.
The monthly service charge for the checking account is $5. What
is the total of the fees Henry pays in April on his checking
account?.

Answers

Answer:

$8.60

Explanation:

.15×24=3.60

3.60+5=8.60

A stock currently sells for $25 per share and pays $0.24 per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for $30 in one year and requires a 15 percent return on equity investments? Working out

Answers

Answer:

$26.30

Explanation:

Calculation to determine the investor's valuation of this stock

Using this formula

Investor's valuation of the stock = [Dividend / (1 + rate)] + [Selling price / (1 + rate)]

Let plug in the formula

Investor's valuation of the stock = [$0.24 / (1 + 0.15)] + [$30 / (1 + 0.15)]

Investor's valuation of the stock = $0.21 + $26.09

Investor's valuation of the stock = $26.30

Therefore the investor's valuation of this stock will be $26.30

________________ mortgage is two or more mortgages consolidated into one payment, and is usually designed to allow the buyer to purchase with a smaller down payment, with the added benefit of a below market interest rate first mortgage. The sellers receive all of their cash at the time of closing, while the lender wraps new money around an existing assumable loan. This type of loan limits its use to homes with an existing FHA or VA loans because most other conventional loans have alienation or due on sale clauses.

Answers

Answer:

wrap around mortgage

Explanation:

A wrap-around mortgage is can be used in deals of owner-financing.

Wrap around mortgage refers to two or more mortgages consolidated into one payment. Such type of mortgage allow the buyer to purchase with a smaller down payment. A buyer also gets an added benefit of a below market interest rate first mortgage. A wrap-around mortgage can only be used to homes with an existing FHA or VA loans.

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