Unit trust Average return Standard deviation Beta Fund Alpha 10% 0.05 0.4 Fund Beta 12% 0.15 1.0 Fund Sigma 15% 0.10 1.2

Q: Spot Price: RM25 Strike Price: RM25 Time to maturity: 1 year Risk free rate: 5% Standard Deviation…

A: Here, Spot Price is RM25Strike Price is RM25Time to maturity is 1 yearRisk free rate is 5%Standard…

Q: Sessions 6 and 7 Question 1: Suppose that you have the following interest rates: Time period (Years)…

A: Yield curve:The yield curve is a graphical representation of interest rates plotted against the…

Q: How long will the given principal P take to reach the aiven maturity value A at the given simple…

A: Number of years in simple interest = (1/r) x [(A/P) - 1] A = Total accrued amount (Interest +…

Q: YTM 6.10% 1-year Zero 2-year Zero 6.20% 3-year Zero 6.30% 4-year Zero 6.40% (Round your final…

A: Since you have not mentioned the specific question we will just answer the first question in case…

Q: Multiple Choice (i.e., years 2, 3, and 4, respectively) are as follows = 4.85%, E(271) = 5.85%,…

A: R1 = 4.85%/100 = 0.0485 in decimalsE(2r1) = 5.85%/100 = 0.0585 in decimalsE(3r1) = 6.35%/100 =…

Q: Assume that the one-year spot rate is 1% (k1=1%) and the expected future spot rate is 3.01% (E (k1)…

A: According to the expectations theory, the forward rate for the second year is: k2 = [(1 + k1)^2 x…

Q: Finance Use the data in the following table to calculate a. The effective duration when rates…

A: Data given: 4% Coupon 10  year T-note YTM Price 4.50% 97.78 4.20% 99.11 4.00% 100.00…

Q: FV = 1000; Coupon rate = 0; maturity 20 years; bond yield = 12% Commission = 4%   Calculate Sale…

A: Face Value (FV) = $1,000Coupon Rate = 0% (which means it's a zero-coupon bond)Maturity = 20…

Q: B. How long wil the given principal P take to reach the given maturity value A at the given simple…

A:

Q: 7 East Boca Co. investors require 12% nominal return and the expected inflation rate is 2%, what is…

A: The inflation rate refers to the rate at which the value of the currency decreases over time and the…

Q: a. What is the YTM? b. Calculate Macaulay’s duration and co c. Plot the price-yield relationship…

A: The yield to maturity is the interest rate you would receive if you purchased a bond and kept it…

Q: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the…

A: In finance and economics, the term structure of interest rates is connected to the Unbiased…

Q: The following graph is most likely CURVE CHART Display Range: 1M - 30Y Yield USBMK=4.525 5.6 5.4 5.2…

A: The image you sent is a graph of the US Treasuries spot curve. The spot curve shows the relationship…

Q: INV 1 1c iii. A 180-day US T-bill is quoted with bid and ask bank discount yields of 6.25% and…

A: The question is related to the T bill. Treasury Bills (abbreviated as T-Bills) are a type of…

Q: F.v= 20,000 P.V= 16,000 n= 3 i= ? Use present and future value formula and find out interest rate.

A: Present Value is the current value of a  future sum of money.

Q: Inputs Annual Coupon Rate 3.70% Number of Years 6 Face Value (PAR) $1,000 Price $1,100.27 In Excel:…

A: The objective of the question is to calculate the Yield to Maturity (YTM) and convexity of a bond…

Q: 15. If the inflation rate is 20% and the nominal risk-free interest rate is 25% then the real…

A: As we know that the Nominal risk-free rate is inclusive of inflation Nominal Risk-free rate = 25%…

Q: Only typed answer Suppose that the current 4-year treasury security rate is 5.5 percent and the…

A: The expectations theory states that the forward rates of the short-term securities clubbed together…

Q: Suppose the spot rates of interest for investment horizons of 1 to 5 years are 4%, and for 6 to 10…

A: Present value of 500 using rates given for 10 years i.e 4.5% 1 to 5 years. 1 500 478.4689 2…

Q: c. The $500,000 EBIT given previously is actually the expected value from the following probability…

A: Time interest earned ratio indicates the ability of company the pay debt and interest on time and it…

Q: Which is the better investment decision: to place money in time deposit earning 5% compounded…

A: Interest rate refers to the rate at which the investment is expected to grow in its value and…

Q: What is the price of a $1 million T-bill that has a discount yield of

A: Treasury Bill, also referred to by the name T-Bill is a short term money market instrument that is…

Q: Calculate the Forward Contract Value of an asset with the following data points: • Current Spot…

A: The spot price plus carrying cost and interest is known as forward price. Under forward contracts…

Q: INV 1 1c A 180-day US T-bill is quoted with bid and ask bank discount yields of 6.25% and 6.00%…

A: The question is related to the T bill. Treasury Bills (abbreviated as T-Bills) are a type of…

Q: Show your solution 1. For each of the following Treasury Bills, calculate the discount basis yield…

A: Here, Formula of Discount Yield and Investment Yield is as follows: Discount Yield=Face Value-…

Q: Suppose the quarterly arithmetic average return for a security is 5% per quarter and the security…

A: The sum of all returns is the arithmetic mean. divided by the total number of time periods utilized…

Q: Assume inflation is expected to be 3% next year, 4% the following year, and 6% thereafter. The…

A: Nominal interest rate It is the real interest rate along with inflation rate. In approximate term,…

Q: Finance What is the OAS on the MBS with the following characteristics: 1. Coupon rate: 9.5% 2.…

A: Option-Adjusted Spread (OAS) is a financial metric used to measure the additional yield an investor…

Q: Based on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for…

A: R10.70%E(2r1)1.85%L20.05%E(3r1)1.95%L30.10%E(4r1)2.25%L40.12%

Q: Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and…

A:

Q: Given the indicated maturities listed in the following table, assume the following yields for US…

A: Data given: Maturity Years Yield Curve 1 3.60% 5 5.5% 10 5.5% 20 4.20% 30 4.00%

Q: III. 3. Nominal Rate - Effective Rate -=[(+4)²-1] 100 _j =m[( + n) = − 1] » x 100 40-0-|(1 +14-1²-1…

A: Effective Interest Rate: EAR represents the rate earned on an investment after the effects of…

Q: You are given the following information: Term (days) Rate DBP 180 6.00% 0.9709 360 6.20% 0.9416 540…

A: The information given is as follows: Term (days) Rate DBP 180 6.00% 0.9709 360 6.20% 0.9416…

Q: What is the approximate return on a 5-year market-linked guaranteed investment certificate (GIC)…

A: Rate of return is percentage return achieved over the investment over the given period of time.

Q: What is the yield-to-maturity (YTM)

A: The yield to maturity indicates the overall return an investor can anticipate from a bond if they…

Q: If the market interest rate is 16% and the inflation rate is 10%, determine the real interest rate.…

A: Market interest rate = 0.16 Inflation rate = 0.10

Q: Inputs Annual Coupon Rate 3.70% Number of Years 6 Face Value (PAR) $ 1,000 Price $1,100.27 In Excel:…

A: The objective of the question is to calculate the Yield to Maturity (YTM) and convexity for a bond…

Q: 48 3/1 ARM has an initial rate of 5.0%. The index is 5.5%, a margin of 2.5%, with a 2.0% rat…

A: ARM stands for Adjustable Rate Mortgage3/1 ARM means a fixed rate for 3 years followed by an…

Q: Q12- Assuming that the interest rate is 6%, which of the following investments has a higher…

A: Interest rate = 6%   Calculation of investment X duration Period Cash flow PVF(6%,Period) Present…

Q: Problem 2 Consider the yield curve above. Suppose the (expected) one-year interest rates in periods…

A: The profits on your assets can be significantly impacted by the yield curve, which is a tool for…

Q: B. Find the annual interest and maturity/yield rate. FACE VALUE COUPON RATE ANNUAL PRESENT VALUE…

A: The given problem can be solved using RATE function in excel. RATE function computes yield to…

Q: Liquidity Premium Hypothesis Based on economists' forecasts and analysis, one-year Treasury bill…

A: R1 = 7.2% E(r2)  = 8.3% L2 = 0.65% E(r3) = 8.4% L3 = 0.75% E(r4) = 8.7% L4 = 0.8%

Q: AMXL price is at 16.20, AMXL is expected to pay a dividend of 16 cents in 30 days and pay a dividend…

A: Current price of AXL is 16.20 Dividend in 30 days is of 16 cents Dividend in 60 days is of 16 cents…

Q: 2. Government Treasury bills are yielding 4.15%. Inflation is 2.75%. What is the real rate of return…

A:

Q: 4 - Based on economistsAc€?c forecasts and analysis, 1-year Treasury bill rates and liquidity…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.