Question: You have collected the following information from the Wall Street Journal 0.5-yr T-note trading at par with coupon rate 4.57% 1-yr T-note trading at par

You have collected the following information from the Wall Street Journal
0.5-yr T-note trading at par with coupon rate 4.57%
1-yr T-note trading at par with ytm = 6.24% p.a.
1.5-yr T-note with coupon rate 5%, trading with ytm = 7.22% p.a.

a) Compute the following zero yields from the above information
Please report per annum semi-annual compounding yields.
Enter your answers below
Maturity Zero yields
0.5
1
1.5

b) From the above calculation, what is the price of a 1.5-yr T-note, face value $100
paying a coupon rate of 10% p.a.
Enter your answer here
c) What is the forward interest rate for a 1-yr loan starting 6 months from now ?
(This is the 6x18 rate.) Please report a per annum semi-annual compounding rate.
Enter your answer here
d) Microsoft is currently selling for $29/share. What is its 1-yr forward price?
Enter your answer here

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!