A "three-against-nine" FRA has an agreement rate of 4.77 percent. You believe six-month CME Term SOFR in three months will be 5.135 percent. You decide to take a speculative position in an FRA with a $1,000,000 notional value. There are 183 days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your forecast is correct about the six-month CME Term SOFR rate. Note: Round your intermediate calculations to 6 decimal places. Round your answer to 2 decimal places. Assume 360 days in a year. for an expected profit of

A "three-against-nine" FRA has an agreement rate of 4.77 percent. You believe six-month CME Term SOFR in three months will be 5.135 percent. You decide to take a speculative position in an FRA with a $1,000,000 notional value. There are 183 days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your forecast is correct about the six-month CME Term SOFR rate. Note: Round your intermediate calculations to 6 decimal places. Round your answer to 2 decimal places. Assume 360 days in a year. for an expected profit of

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor buys a $10,000 par, 5% coupon (semiannual payments) TIPS security with two years to maturity. If inflation every six months over the two years is 1.2 percent, what is the final payment (principal and interest) the TIPS Investor will receive? Input your final answer using two decimal places. Do not round intermediate calculations.
A “three-against-nine” FRA has an agreement rate of 4.76 percent. You believe six-month LIBOR in three months will be 5.14 percent. You decide to take a speculative position in a FRA with a $7,000,000 notional value. There are 182 days in the FRA period. Determine what your expected profit will be if your forecast is correct about the six-month LIBOR rate. (USD with cents)
An investor has the opportunity to make an investment that will provide an effective annual yield of 13.0 percent. She is considering two other investments of equal risk that will provide compound interest monthly and quarterly, respectively. Required: a. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest monthly to ensure that an equivalent annual yield of 13.0 percent is earned?b. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest quarterly to ensure that an equivalent annual yield of 13.0 percent is earned? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. Please answer fast i give you upvote.
A trader bought two July futures contracts. Each contract is for the delivery of 1,000 barrels. The initial margin is $11,250 per contract and the maintenance margin is $9,000. Calculate the daily gain and loss and margin account balance from April 13, 2020 to April 15, 2020 and explain when the investor will receive a margin call and how much does he need to top up?
An investor has taken 50 short positions on a futures contract with a startingtime of 4 TL per contract, a continuation period of 3.00 TL for each contract and a current price of 20 TL. In addition, only 1 basis application is made for each contract. After 1 day, the contract price was 22 TL. How much funds need to be invested to cover the initial delivery?
Heba is expecting to get OMR 50000 at the end of 5 years. How much will be the value today if: Option a: The discount rate is 9.02% half yearly Option b: The discount rate is 128% quarterly Select one: a. Option a: 32000.25 Option b: 36000.55 b. Option a: 650o0.35 Option b: 4900245 c. Option a: 32500.20 Option b: 32000.50 d. Option a: 32165.59 Option b: 32009.50
Suppose that your company is planning to sell 1.25 million litres of fuel in two years. Thecurrent price of fuel is £1.60 per litre. a) Suppose there is a two-year heating oil futures contract available. The futuresprice is £1.63 per litre. How many contracts would you need to fully eliminate yourrisk exposure over the next two years? How many contracts would you need ifyour optimal hedging ratio was 0.75? What position in these contracts would youtake today? Explain. b) Evaluate the outcomes of your hedging strategy if the price of fuel in two years is(1) £1.72 per litre, and (2) £1.58 per litre. In each case assume the heating oilfutures price to be equal to that of the fuel. Comment on your results.
A company has offered you two different payment plans for purchasing a product, • Option A. 15% down payment (of the total price) and 10 annual payments of $1,200.• Option B. No down payment and 12 annual payments of $ 1,500.Treat the down payment as occurring at Year 0. Assume an interest rate of 8% per year. a. What is the down payment of Option A?b. What is the price paid for the product under Option A?c. What is the price paid for the product under Option B?d. Which payment option should be selected, A or B?e. Briefly explain why someone might choose the option that has the larger sale price.
Consider a one-year loan with a face value of S100,000and a coupon rate of 20%. The loan requires payment ofaccrued interest and one-quarter (25%) of the principaat the end of six months. The remaining principal andaccrued interest are due at the end of the year. lf therequired yield is 15%, what is the duration of the loan interm of years? (Please round your answer to three decimal places.)
None
You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0.57 and a premium of 7.86 (USD/AUD). You hold these options for 1 month and then sell them for 6.8 (USD/AUD). The brokerage fee on each contract is payable on both entry and exit and is USD 12.21. What is the net profit on this transaction in USD? O a. -190,946.52 Ob. -31,824.42 Oc. -190,800.00 O d. -190,873.26 Oe. -55,800.00 You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0.57 and a premium of 7.86 (USD/AUD). You hold these options for 1 month and then sell them for 6.8 (USD/AUD). The brokerage fee on each contract is payable on both entry and exit and is USD 12.21. What is the net profit on this transaction in USD? O a -190,946.52 Ob 31,824.42 O-190,800.00 Od 190,873.26 -55.800.00
The price of a stock is currently $200 per share. It'll pay a dividend of $0.85 every 3 months (the next dividend will occur 3 months from now). 3-month and 5-month risk free interest rates are 0.2% and 0.25%, respectively. All rates are annual rates with continuous compounding. What should be the delivery price of a 5-month forward contract so that the contract is of zero cost? Keep 2 digits in your final answer. Do not include $ sign.

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