Module Assignment For this Assignment Module, respond to the following questions: 1. A bank quotes an interest rate of 14% per annum with quarterly compounding. What is the equivalent rate with

Module  Assignment

For this Assignment Module, respond to the following questions:

1. A bank quotes an interest rate of 14% per annum with quarterly compounding. What is the equivalent rate with (a) continuous compounding and (b) annual compounding?

2. What is meant by LIBOR and LIBID. Which is higher?

3. The 6-month and 1-year zero rates are both 10% per annum. For a bond that has a life of18 months and pays a coupon of 8% per annum (with semiannual payments and onehaving just been made), the yield is 10.4% per annum. What is the bond’s price? What isthe 18-month zero rate? All rates are quoted with semiannual compounding.

4. An investor receives $1,100 in one year in return for an investment of $1,000 now.Calculate the percentage return per annum with:(a) Annual compounding(b) Semiannual compoundingInterest Rates 97(c) Monthly compounding(d) Continuous compounding.5. Suppose that 6-month, 12-month, 18-month, 24-month, and 30-month zero rates are,respectively, 4%, 4.2%, 4.4%, 4.6%, and 4.8% per annum, with continuous compounding.Estimate the cash price of a bond with a face value of 100 that will mature in30 months and pays a coupon of 4% per annum semiannually.

6. Assuming that zero rates are as in Problem 4.5, what is the value of an FRA that enablesthe holder to earn 9.5% for a 3-month period starting in 1 year on a principal of$1,000,000? The interest rate is expressed with quarterly compounding.

7. The term structure of interest rates is upward-sloping. Put the following in order ofmagnitude:(a) The 5-year zero rate(b) The yield on a 5-year coupon-bearing bond(c) The forward rate corresponding to the period between 4.75 and 5 years in the future.What is the answer when the term structure of interest rates is downward-sloping?

8.  What does duration tell you about the sensitivity of a bond portfolio to interest rates.What are the limitations of the duration measure?

9. What rate of interest with continuous compounding is equivalent to 15% per annum withmonthly compounding?

10. A deposit account pays 12% per annum with continuous compounding, but interest isactually paid quarterly. How much interest will be paid each quarter on a $10,000 deposit?

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!