Chapter 6: Problems: 1 4 page 147 Chapter 7: Questions and Applications: q. 2, 4, 10, and 16, pages 169-170 Chapter 6: 1. T-bill Yield Assume an investor purchased a six month T-bill with a $10,000 equality shelter for $9,000 and exchange it 90 days by and by for $9,100. What is the yield? Yield: (Sold Price- obtain Price/ acquire Price)*(365/ judgment of conviction held) Yt=((9100-9000)/9000)*(365/90) Yt=4.506 % or 4.51 % 2. T-bill Discount Newly issued three-month T-bills with a par value of $10,000 sold for $9,700. Compute the T-bill discount. Yield: (Par-Purchase Price/Par)*(360/ measure held) YD= ((10000-9700)/10000)*(360/90) YD= 12.000% 3. Commercial typography Yield Assume an investor purchased six-month commercial study with a stage value of $1 one gram million for $940,000. What is the yield? Yield: (Par value-Purchase value/Purchase Price)*(360/ eon held) Ycp=((1000000-940000)/940000)*(360/180) Ycp=12.766 % or 12.77% 4. Repurchase Agreement Sta nford stool arranged a buy back agreement in which it purchased securities for $4.9 million and allow sell the securities back for $5 million in 40 days. What is the yield (or repo rate) to Stanford Corporation? Repo rate: (Sold Price-Purchase Price/Purchase Price)*(360/time held) Repo rate= ((5000000-4900000)/4900000)*(360/40) Repo rate= 18.367% or 18.
37 % Chapter 7: 2. Sinking-Fund prep inform the use of a sinking-fund provision. How can it reduce the investors risk? A sinking-fund provision is created by a filthy issuing adhesivenesss; this fund requires the issuing firm to maintain a predetermined amount o f the issued bond papers. This provision se! cures the bond holders investment by lowering payments and providing an umbrella for bonds at maturity. 4. Call Provisions rationalise the use of call provisions on bonds. How can a call provision affect the price of a bond? A call provision enables the issuer of a bond to buy its bonds prior to maturity at a pre-determined price (call price). both call provision drives...If you want to get a full(a) essay, ordering it on our website: OrderCustomPaper.com
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