Exercise: Rates Assignment Instructions

1. It is important to know what the standard rates are. Include your answers to the below on the Exercise: Rates Template.
   • Go to 1 Year Constant Maturity Treasuryfound in the Exercise: Rates Assignment Resourcesin the Exercise: Rates Assignment. Report the rates for the 1-Year Treasury.

• Go to Best CD Ratesfound in the Exercise: Rates Assignment Resourcesin the Exercise: Rates Assignment. Report the best CD rate.

• Go to Google Finance found in the Exercise: Rates Assignment Ressourcesin the Exercise: Rates Assignment. Report the Dow Jones and S&P 500.

1. Go to Google Finance found in the Exercise: Rates Assignment Resourcesin the Exercise: Rates Assignment. Enter Walmart (WMT) in the search box. Include your answers to the below on the Exercise: Rates Template.
   • Step (a): Record the last closing price (for example, previous close - yesterday's closing price)
   • Step (b): Record the change (current price minus previous close) for the day (up or down and how many dollars & cents)
   • Step (c): Divide your change for the day (from b above) by the last closing price (from step a above). The result is typically something like 0.1234 or 0.0123. Convert the decimal to a percent (such as 12.34% or 1.23%).
     • Step (a): Last closing price (previous close) of Walmart = 143.34

Example:

• Step (b): Change for the day (up or down) = -1.95
• Step (c): Divide (b) by (a) = -$1.95/$143.34 = 0.01360 = -1.36% <-- R.O.I. in percent.
• Find the yield to maturity on the following bond.

1. I can buy a $1,000 bond for $950. I get $50 a year and it matures in 20 years. I want to know what interest rate I am earning. Remember this is a time value of money problem, so you need to use your financial calculator or Excel and include inputs like you did in module 1. Include your answers on the Exercise: Rates Template.
2. Please write an summary of how rates directly correspond with risk.