Questions from Business Statistics

Q: The five-year swap rate when cash flows are exchanged semiannually

The five-year swap rate when cash flows are exchanged semiannually is 4%. A company wants a swap where it receives payments at 4.2% per annum on a principal of $10 million. The OIS zero curve is flat...

Q: Explain the difference between a market-if-touched order and

Explain the difference between a market-if-touched order and a stop order.

Q: A 5-year bond with a yield of 7% (

A 5-year bond with a yield of 7% (continuously compounded) pays an 8% coupon at the end of each year. (a) What is the bond’s price? (b) What is the bond’s duration? (c) Use the duration to calculate t...

Q: The cash prices of 6-month and 1-year Treasury

The cash prices of 6-month and 1-year Treasury bills are 94.0 and 89.0. A 1.5-year Treasury bond that will pay coupons of $4 every 6 months currently sells for $94.84. A 2-year Treasury bond that will...

Q: How much is gained from exercising early at the lowest node at

How much is gained from exercising early at the lowest node at the 9-month point in Example 21.4?

Q: A U.S. company expects to have to pay 1

A U.S. company expects to have to pay 1 million Canadian dollars in 6 months. Explain how the exchange rate risk can be hedged using (a) a forward contract and (b) an option.

Q: An investor receives $1,100 in one year in return

An investor receives $1,100 in one year in return for an investment of $1,000 now. Calculate the percentage return per annum with: (a) Annual compounding (b) Semiannual compounding (c) Monthly compoun...

Q: What does duration tell you about the sensitivity of a bond portfolio

What does duration tell you about the sensitivity of a bond portfolio to interest rates. What are the limitations of the duration measure?

Q: Explain what happens when an investor shorts a certain share.

Explain what happens when an investor shorts a certain share.

Q: Estimate the difference between short-term interest rates in Japan and

Estimate the difference between short-term interest rates in Japan and the United States on May 3, 2016, from the information in Table 5.4.