Assume an asset that pays no income and has no storage cost is priced at $1000. If a 6-month Forward on that asset is priced at $1019, what is the “implied Repo-rate” on that asset?
Assume an asset that pays no income and has no storage cost is priced at $1000....
Calculate the forward price of an investment asset which has a spot price of USD80.00 and six-month (exactly 0.5 year) interest rates are 5% on a continuously compounded basis and the six-month storage costs for the asset amount to 1% on an annualized basis. The asset pays continuous income at the rate of 2% on an annualized basis.
Suppose our underlying is a stock XYZ. Today (t=0), XYZ is priced at $1,046. The storage and insurance cost is $16, paid in advance. The forward contract uses XYZ as the underlying, which will expire in one year from today. The interest rate is 0.044. The forward price at today (t=0) is $1,227. What is the arbitrage profit that you can make today based on cost-of-carry model?
Suppose our underlying is a stock XYZ. Today (t=0), XYZ is priced at $1,070. The storage and insurance cost is $13, paid in advance. The forward contract uses XYZ as the underlying, which will expire in one year from today. The interest rate is 0.044. The forward price at today (t=0) is $1,441. What is the arbitrage profit that you can make today based on cost-of-carry model?
An individual with an income of 1000 is considering the purchase of a risky asset for $250. There is a 40% chance the asset will earn $1000 and a 60% chance it will be worthless. a. Will the individual purchase this asset? b. What is the cost of risk for this individual if the asset is purchased? c. How much will the cost of risk be if a 2nd identical person is brought in to help purchase the asset? Assuming...
(After tax cost of dept) FitBite, Inc, currently has an outstanding bond that pays interest annually, a coupon rate of 6%, priced at $1,050, and 5 years until maturity. If it is in the 35% marginal tax rate, what is its after tax cost of dept? What is the after tax cost of dept of it pays interest semiannually?
A $1000 par value bond has a coupon rate of 7.8%, pays interest semi-annually, matures in 26 years, and is priced at a 58.28 discount from par value. What is the annual yield to maturity of this bond? (Answer to the nearest one hundedth of a percent, i.e., 1.23 but do not include the % sign).
10. What should a trader do when the one-year forward price of an asset is too low? Assume that the asset provides no income. A. The trader should borrow the price of the asset, buy one unit of the asset and enter into a short forward contract to sell the asset in one year. B. The trader should borrow the price of the asset, buy one unit of the asset and enter into a long forward contract to buy the...
1. A 1-year floating-rate note pays three-month LIBOR plus 1%. The floater is priced at 98 per 100 of par value. Calculate the discount margin for the floater assuming that three-month LIBOR is constant at 2%. Assume the 30/360 day-count convention, A. 1.2659% B. 3.0637% C. 3.0765% 2. The following are two statements About a callable bond: Statement 1: "The borrower of the callable bond has the right to repurchase the bond at a specific price." Statement 2: "A callable...
1, 2, assume that the individual`s utility function is given by: An individual with an income of 1000 is considering the purchase of a risky asset for $250. There is a 40% chance the asset will earn $1000 and a 60% chance it will be worthless. Will the individual purchase this asset? What is the cost of risk for this individual if the asset is purchased? How much will the cost of risk be if a 2nd identical person is...
22. Assume a company purchases a depreciable asset for $1 million, and that the asset has an eight-year estimated life and a zero salvage value. How much more cash will the owner of the asset have at the end of the second year if the owner uses double-declining-balance depreciation rather than straight line for tax accounting, assuming the company is profitable and pays income taxes at a 40 percent rate?