Homework Answers
a.
Add Answer to:
Please show work.
Maximum Pension Fund is attempting to manage one of the bond portfolios under...
You work for a pension fund company. One account starts its pension payments at the end...
You work for a pension fund company. One account starts its pension payments at the end of two years from now. The duration of pension payment is 10.5 years when the pension starts. The present value of the pension payment is $123,456. Currently, the pension’s yield is 5%. To neutralize the interest rate risk, you would like to use a zero coupon bond (ZCB). What should be the maturity of ZCB? What is the face value (future value) of ZCB?
Problem 4. You work for a pension fund that has an obligation that must be paid...
Problem 4. You work for a pension fund that has an obligation that must be paid in 10 years. Currently this obligation, which has a present value of $200 million, is exactly funded (i.e., the market value of the fund's assets equals the present value of its obligation; net equity is exactly zero). Te duration of the fund's assets is currently 8. The yield-to-maturity on zero coupon bonds of all maturities is currently 6%. (a) Using the duration information, what...
Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities: Bond...
Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities: Bond Coupon (%) Price (%) 7 89.50 9 108.50 10 139.50 a. What is the yield to maturity of each bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Bond Coupon (%) YTM 7 % 9 % 10 % b. What is the duration of each bond? (Do not round intermediate calculations. Round your answers to 2...
You currently have pension fund assets of $15 million in a bond portfolio with a Macaulay...
You currently have pension fund assets of $15 million in a bond portfolio with a Macaulay duration of 10. Your liabilities are $2.7 million per year starting 30 years from today (i.e. at time 30) and lasting for 30 years (i.e. the last payment is at time 60). The yield curve is flat with spot rates constant at 4% for all maturities. (a) Compute the present value of your liabilities. Do you have enough assets to cover those liabilities? (b)...
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must...
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must pay out $1 million per year to cover these annuities. Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% (flat term structure). You plan to cover this obligation by investing in 5- and 20-year maturity Treasury strips. (A) What is the duration of the funds 20-year pay-out obligation? (2 marks) (B) You decide to minimize...
Frank Meyers is a fixed-income portfolio manager for a large pension fund. A member of the Investiment Committee, Fred Spice, is very interested in learning about the management of fixed-income portfolios. Spice has approached Meyers with several question
Frank Meyers, CFA, is a fixed-income portfolio manager for a large pension fund. A member of the Investiment Committee, Fred Spice, is very interested in learning about the management of fixed-income portfolios. Spice has approached Meyers with several questions. Specifically, Spice would like to know how fixed-income managers position portfolios to capitalize on their expectations of future interest rates. Meyers decides to illustrate fixed-income trading strategies to Spice using a fixed-rate bond and note. Both bonds have samiannual coupon periods. Unless...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
Can you please show your work and/or calculator steps? Problem 11-26 A 30-year maturity bond making...
Can you please show your work and/or calculator steps?
Problem 11-26 A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3% has duration of 10.59 years and convexity of 163.0. The bond currently sells at a yield to maturity of 9%. e-1. Find the price of the bond if it's yield to maturity rises to 10%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Price of the...
please answer all these multiple chioce questions in the pictures. ASAP!!! Assume the below information to...
please answer all these multiple chioce questions in the
pictures. ASAP!!!
Assume the below information to answer the following question(s). Company Ford (F) Coupon 11.0 Maturity July 31, 2014 EST EST Last Price Last Yield Spread UST 65.50 ? 104 10 VOL. (000s) 5,100 We were unable to transcribe this image19) Jia Hua Enterprises wants to iss bonds. If each bond is priced to Enterprises wants to issue sixty 20-year. $1.000 par value, zero-coupon en bond is priced to vield...
Please limit your answer to a maximum of one short paragraph per question 1. The table...
Please limit your answer to a maximum of one short paragraph per question 1. The table on the right shows the most current government economic indicators. How much did the average living standards increase in the US in 2015. Year GDP in billions of current dollars Real GDP in billions of chained 2009 dollars US Population Estimates 2014 17,393.1 15,982.3 320,289,069 2015 18,036.6 16,397.2 322,761,807 Growth 3.7% 2.6% 0.8% Source: BEA Source: Census 2. Indicate if the following...
Problem 4. You work for a pension fund that has an obligation that must be paid in 10 years. Currently this obligation, which has a present value of $200 million, is exactly funded (i.e., the market value of the fund's assets equals the present value of its obligation; net equity is exactly zero). Te duration of the fund's assets is currently 8. The yield-to-maturity on zero coupon bonds of all maturities is currently 6%. (a) Using the duration information, what...
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must pay out $1 million per year to cover these annuities. Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% (flat term structure). You plan to cover this obligation by investing in 5- and 20-year maturity Treasury strips. (A) What is the duration of the funds 20-year pay-out obligation? (2 marks) (B) You decide to minimize...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
Can you please show your work and/or calculator steps?
Problem 11-26 A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3% has duration of 10.59 years and convexity of 163.0. The bond currently sells at a yield to maturity of 9%. e-1. Find the price of the bond if it's yield to maturity rises to 10%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Price of the...
please answer all these multiple chioce questions in the
pictures. ASAP!!!
Assume the below information to answer the following question(s). Company Ford (F) Coupon 11.0 Maturity July 31, 2014 EST EST Last Price Last Yield Spread UST 65.50 ? 104 10 VOL. (000s) 5,100 We were unable to transcribe this image19) Jia Hua Enterprises wants to iss bonds. If each bond is priced to Enterprises wants to issue sixty 20-year. $1.000 par value, zero-coupon en bond is priced to vield...
Most questions answered within 3 hours.
-
the slime layer external to the prokaryotic cell wall is called
the ?
asked 5 minutes ago -
Cheyenne Company must decide whether to make or buy some of its
components. The costs of...
asked 8 minutes ago -
What is the maximum number of edges that a graph on 7 vertices can
have if...
asked 6 minutes ago -
What is the entropy change for mixing 1 liter of a monoatomic
ideal gas (call it...
asked 6 minutes ago -
A company that has 150 employees chooses a committee of 11 to
represent employee retirement issues....
asked 27 minutes ago -
the
force between two 2.11 x 10^-4 C charges that are 2.11 meters apart
is ______N?
asked 42 minutes ago -
A truck of mass m slows from speed v0 to speed v in a
time t....
asked 28 minutes ago -
A 60kg box rests on a floor with a coefficient of kinetic
friction of 0.600 and...
asked 26 minutes ago -
if you cut off ANS innervation what would happen to the heart
rate?
asked 25 minutes ago -
What is the output of the below code?
var color = "yellow";
var colorObject = {...
asked 26 minutes ago -
Suppose you purchased 19 shares of Disney stock for $23.95 per
share on May 1, 2012....
asked 30 minutes ago -
Using the sample PV system below, calculate the wire sizes
needed for various portions of the...
asked 44 minutes ago