Assuming that risk-free rates for 15 months are 3.6%, what is the value of an FRA where the holder will pay LIBOR and receive 4.5% (quarterly compounded) for a three-month period starting in one year on a principal of $1,000,000. The forward LIBOR rate for the three-month period is 5% quarterly compounded.

Assuming that risk-free rates for 15 months are 3.6%, what is the value of an FRA where the holder will pay LIBOR and receive 4.5% (quarterly compounded) for a three-month period starting in one year on a principal of $1,000,000. The forward LIBOR rate for the three-month period is 5% quarterly compounded.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Similar questions

What is the present value or Principal, that will return $40,000 in a Guaranteed Investment Certificate (GIC) in 9 years at 4 ¼ % APR compounded quarterly?
2. $4200 is invested for 9 months at an annual simple interest rate of 12%. How much interest will be earned? Round youranswer to the nearest cent, if necessary
14. A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000semiannual payments at six month intervals. What is the PV of these payments if the annual discount rateis 8 percent?
Assume that you take out a $3000 loan for 47 months at 6.5% APR. How much total interest will you have paid at the end of the 47 months? (Round your answer to the nearest cent.) $ 3631.12
5. An investor buys a 150 TL investment fund from the bank and sells it for 165 TL after 25 days. What is the % of Annual Effective Return? 6. If the monthly (periodically) interest is 1% for a one-month deposit, what is the Annual Effective Return?
Suppose you borrowe9 $12,000 at an interest rate of 8%, compounded monthly over 36 months. At the end of the first year (after 12 payments), you want to negotiate with the bank to pay off the remainder of the Joan in eight equal quarterly payments. What is the amount of this quarterly payment, if the interest rate and compounding frequency remain the same?
Directions: Solve the following problems. A loan of P40,000is to be amortized by equal payments at the end of each for 18 months. quarter I interest is 10% compounded quarterly, find the periodic payment and construct an amortization schedule.
5. Auto loan requires payments of 300 Rial at the end of each interval for 3 years at a nominal annual rate of 9%, compounded monthly. The present value of this loan equal 9434.04 Rial a. At what interval the payment should be made? b. Find the amount will accumulated at the end of 3 years?
Suppose you borrow $70,000 at 5.25% annual interest to be repaid with a fully amortized plan over 14 years (equal end-of-year payments). What is the annual payment? What is the total amount of principal and interest paid?
Problem. A P45,000 loan at 10% compounded monthiy is to be amortized every month a year. Find the monthly payment and construct an amortization table. Solution:
3. An investment offers P4,900 per year for 15 years, with the first payment occurring one year fromnow. If the required return is 8 percent, what is the value of theinvestment? What would the value be if the payments occurred for 20years?
A 3/1 ARM is made for $170,000 at 7 percent with a 30-year maturity. Required: a. Assuming that fixed payments are to be made monthly for three years and that the loan is fully amortizing, what will be the monthly payments? What will be the loan balance after three years? b. What would new payments be beginning in year 4 if the interest rate fell to 6 percent and the loan continued to be fully amortizing? c. In (a) what would monthly payments be during year 1 if they were interest only? What would payments be beginning in year 4 if interest rates fell to 6 percent and the loan became fully amortizing?