Short Computations (10 questions, 10 points each) Please see the current market conditions in the appendix. For the forward rate calculations, assume these rates are all annual compounding rates nput %'s in canvas as numbers to two decimal places (i.e. 5.125%% is 5.13, not 0.05) Compute bond prices to three decimal places 21 Using the yield curve in the Appendix, see that the lyr rate is 2.500%% and the Zyr rate is 2.660%. What is the implied lyr rate in 1 year (to two decimal places)? 22 Using the yield curve in the Appendix, what is the implied 3yr rate in 2 years (to two decimal places)? 23 Using the yield curve in the Appendix, what is the implied 4yr rate in 1 years (to two decimal places)? 24 You own $12 mil Par Amount of a UST 3% 30yr bond. Using current market conditions in the Appendix, what is the bond's price (to three decimal places)? 25 You own $12 mil Par Amount of a UST 31 30yr bond. Using current market conditions in the Appendix, what is the value of your holdings (in millions, to two decimal places)? 26 Five years ago, you bought $25 mil Face Value of Caterpillar (BBB Rated) 4% 10yr bonds at a YTM of 4.380%%. What was the amount of your initial investment amount (i.e. what was their value when you bought them) (in millions, to two decimal places)? 27 Five years ago, you bought $25 mil Face Value of Caterpillar (BBB Rated) 4%: 10yr bonds at a YTM of 4.375%. What are your holdings worth today, using current market conditions in the Appendix (in millions, to two decimal places)? 28 If today you could sell the Caterpillar Bonds at a price of 104.000, what would be the YTM (to two decimal places)? 29 You are evaluating shares in Honeywell International (HON). They currently pay an annual dividend of $4.00 per share this year and expect to raise that by 5%% per year every year in the future. If you use a discount rate of 10%, what is the value of HON shares (to two decimal places)? 30 You are evaluating a newer company, an adult-dating website: Cougar Power (CGR). Cougar expects to pay $5.00 annual dividends for three years, and each year those dividends will grow by 20%% per year. Then, as the company matures, it expects that dividends will only grow by 5%% per year thereafter. If you discount CGR at 12%%, what is the value of CGR (to two decimal places)?Appendix: Market Data UST Yield Curve Credit Spreads 1.50OK In Bps, for Rating & Maturity 5yr 7yr 3.00ON 3yr 10yr 30yr AAA 5 10 15 20 25 AA 15 20 25 30 35 A 35 40 45 50 55 20004 BBB 65 70 75 80 85 15004 0.500% Credit Spreads are quoted in bos Remember: a bps is 1/100th of 1% 0.000% 1 2 3 4 5 8 9 10 30 For example, 25 bps = 0.25% YTM 2 500% 2.650% 2 800% 2.920% 3.020% 3 100% 3.160% 3 200%4 3.220% 3.220% 3.220% Maturity Mears)
