Need help with A
Question 3 2018:
Suppose that the current oneyear interest rate is at 2%, the twoyear rate is at
2.5% and the threeyear rate is at 3%. A trader quotes the oneyear rate, one
year forward as 2.8%. Assume that there is no bidask spread (i.e., you can lend
and borrow at the same rate) and that no other trader is quoting in the forward
market.
a) What is the oneyear forward rate for a contract that expires in one year (i.e.,
the forward rate for a contract to lend or borrow in one year for one year)?
b) Describe a trade that you could implement to profit from this quote.
c) How would you trade if the oneyear forward rate quoted by the trader was
3.3%?
d) If your forecast is that the yield curve will be the same next year, how can
you trade to benefit from this prediction, if possible?
e) Calculate the oneyear forward rate for a contract that expires in three years.
f) Briefly explain whether the forward curve described by the oneyear forward
rates in parts (a) and (e) is in contango or backwardation.
g) Suppose the forward curve consists of the following forward rates:
1year spot rate: 2.0%
1year rate, one year forward: 3.0%
1year rate, two years forward: 4.0%
What is the value per £100 of par value of a threeyear bond with a coupon
of 4% with interest payments paid annually?
Question 1c 2018:
c)
d) Assume that the current date is 10 January 2018. Calculate the accrued
interest for the cheapesttodeliver note in the table in part (c), which pays
interest semiannually on 15 April and 15 October. Show your workings.
Hospital A sold 45 units @ $55.00 and had a beginning inventory of 60 units @ $18 and had purchased 25 units at $20 and another purchase of 35 units @ $22. Taxes were $300.00 and operating expenses were $575.00.
Prepare an inventory analysis to exhibit FIFO and LIFO.
(Future value) You are hoping to buy a house in the future and recently received an inheritance of $16,000. You intend to use your inheritance as a down payment on your house. a. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to $35,000? b. If you let your money grow for 10 years at 8 percent, how much will you have? c. How long will it take your money to grow to $35,000 if you move it into an account that pays 3 percent compounded annually? How long will it take your money to grow to $35,00 if you move it into an account that pays 13 percent? d. What does all this tell you about the relationship among interest rates, time, and future sums?
key differences between a European put and European call?
Question 2b 2017:
Question 5 2016:
QUESTION 25

a. 
Receipt of scheduled coupon payments 

b. 
Reinvestment of received scheduled principal payments 

c. 
Potential capital gains or losses on the sale of the bond prior to maturity 