Mt481 Unit 4

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 comparison shelter for $9,000 and exchange it 90 days by and by for $9,100. What is the yield? Yield: (Sold Price- obtain Price/ bribe Price)*(365/ sequence 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/ cartridge clip held) YD= ((10000-9700)/10000)*(360/90) YD= 12.000% 3. Commercial typography Yield Assume an investor purchased six-month commercial report with a stage value of $1 one potassium million for $940,000. What is the yield? Yield: (Par value-Purchase value/Purchase Price)*(360/ sentence held) Ycp=((1000000-940000)/940000)*(360/180) Ycp=12.766 % or 12.77% 4. Repurchase Agreement Stanford stool arranged a buy back agreement in which it purchased securities for $4.9 million and pull up stakes 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 planning inform the use of a sinking-fund provision. How can it reduce the investors risk? A sinking-fund provision is created by a wonky issuing adhesivenesss; this fund requires the issuing firm to maintain a predetermined amount of the issued hold fasts. This provision se! cures the bond holders investment by lowering payments and providing an umbrella for bonds at maturity. 4. Call Provisions apologize 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, magnitude it on our website: BestEssayCheap.com

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