The following is a set of U.S. Treasury spot rates. Maturity (years) 1 2 3 4...
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The following is a set of U.S. Treasury spot rates. Maturity (years) 1 2 3 4 5 Spot Rate (EAY) 8% 9% 11% 13% 14% Based on the above table, you intend to lock in a rate to borrow funds for four years starting at the end of year 1. 1. Compute the rate that you should lock in. Keep your answer in four decimal places as a percentage, e.g., 5.1234%. 2. If you borrow $500,000 at the end of year 1 at the rate you lock in above, how much do you need to repay at the end of the loan? Keep the final answers in 2 decimal places, e.g., $10.12. 3. To lock in the forward borrowing rate, which TZCB should you buy today and which TZCB should you Show your work and highlight your final answers. sell today? The following is a set of U.S. Treasury spot rates. Maturity (years) 1 2 3 4 5 Spot Rate (EAY) 8% 9% 11% 13% 14% Based on the above table, you intend to lock in a rate to borrow funds for four years starting at the end of year 1. 1. Compute the rate that you should lock in. Keep your answer in four decimal places as a percentage, e.g., 5.1234%. 2. If you borrow $500,000 at the end of year 1 at the rate you lock in above, how much do you need to repay at the end of the loan? Keep the final answers in 2 decimal places, e.g., $10.12. 3. To lock in the forward borrowing rate, which TZCB should you buy today and which TZCB should you Show your work and highlight your final answers. sell today?
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Related Book For
Statistics For Managers Using Microsoft Excel
ISBN: 9780133130805
7th Edition
Authors: David M. Levine, David F. Stephan, Kathryn A. Szabat
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