Question
a. Suppose a money market loan or security can be purchased for a price of Rs. 97 and has a face value of Rs.100 to
a. Suppose a money market loan or security can be purchased for a price of Rs. 97 and has a face value of Rs.100 to be paid at maturity. If the loan or security matures in 90 days, what is the interest rate measured by the bank discount rate (DR) based on a 360-day year? b. Consider a bond held by a bank that carries a duration of five years and a current market value (price) of Rs. 1000. Market interest rates attached to comparablebonds are about 10% currently, but recent forecasts suggest that market rates may rise to 12.2%. If the forecast turns out to be correct, what will be the percentage change in price and so bonds market value? Note : Please provide answer asap
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