Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question Eleven a) Kofi is short of funds and need money to meet an impending huge withdrawal from a customer. It has 91-day bill which

image text in transcribed

Question Eleven a) Kofi is short of funds and need money to meet an impending huge withdrawal from a customer. It has 91-day bill which is not yet matured. It approaches bank B and ask for a transfer of C250m for which it uses the Bill value it C250m as collateral. Within 5 - days bank A repurchased the bill at 250.5m calculate the repo rate for this agreement. b) Bond has a face value of C3000 and pays coupon of 12% per annum for 4 years, if the market interest rate is 16%. How much will you pay for this bond? The coupon was to be paid semiannually and your answer be different. c) Bond has a face value of 1000 with our (4) years to maturity, it pays coupon 10% per annum. The market interest rate 8%. Calculate the duration of the bond d) A bond has 5 years to mature. Its face value is &1500 and pays a coupon of 12% coupon is paid on a semi- annual basis. The market interest rate is 14% (i) What is the duration of this bond? (ii) Assume that interest rate falls by 0.5% by how much will the bond price increase? (iii)Compute the new price of the bond

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Value Investor's Handbook

Authors: Andrew P.C.

1st Edition

1098810449, 978-1098810443

More Books

Students also viewed these Finance questions