Fin 7000 problem set 2 37557


Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?

Problem 1: Fill in the table below for each of the following interest rates:


Compounding PV of $1000

Case Stated Annual Rate Periods Per Year Effective Annual Rate at t = 2

1 .12 1

2 .12 2

3 .12 4

4 .12 12

5 .12 24

6 .12 infinity


Problem 2:


The effective annual rate is 3% (i.e., re = .03). What is the stated rate for compounding semi-annually that is associated with this effective rate?That is, solve for rs such that 1+re = (1+(rs/2))2 given re = .03.


Problem 3:


Consider the following information on a yield curve (where t = 0 is now)


Time (in years) to Maturity (TTM) Effective Annual Rate

  1. .01

  2. .015

  3. .02

  4. .0225

  5. .0235


Part 1: Using this yield curve, calculate the present value of the following payment streams:


  1. $100 at t = 1,

  2. $100 at t = 2,

  3. $100 at t = 3,

  4. $100 at t = 4,

  5. $100 at t = 5,

  6. $100 at t = 1 and $100 at t = 4

  7. $200 at t = 2 and $200 at t = 5


Part 2: Also using the above yield curve, calculate the forward rate for the one-year yield next year at t = 1. If you take your answer to b above divided by your answer to a above and then subtract 1, do you get the same answer?


Part 3: Consider the following two strategies for getting a return over three years:


Strategy 1: Invest for three years at the three year rate;

Strategy 2: invest at the two-year rate for two years and then roll over into the one-year rate in two years.


You can calculate a forward rate for the one-year rate in two years (at t = 2) by considering the one-year rate in two years that would make you indifferent between Strategy 1 and Strategy 2. What is that forward rate?

Place your order
(550 words)

Approximate price: $22

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