Use the following information for part a and b. The 1-year, 2-year, 3-year and 4-year zero...

Use the following information for part a and b. The 1-year, 2-year, 3-year and 4-year zero rates are 2%, 3%, 4% and 5% per annum (APR) with quarterly compounding/payment.

A)What are the zero coupon bond prices with maturities of 1 year, 2 years, 3 years and 4 years? (Assume that you receive a face value of $100 for each of these bonds on their maturity dates).

B)What are the corresponding per annum zero rates with continuous compounding?

Please show work and do not just post picture of excel.

Expert Solution

1yr zero coupon bond price - $ 98.04

2yr zero coupon bond price - $ 94.26

3yr zero coupon bond price - $ 88.90

4yr zero coupon bond price - $ 82.27

corresponding per annum zero rates

Per annum zero coupon rate for year 1 will be the same at 2%

per annum zero coupon rate for year 2 will be 4.01%

per annum zero coupon rate for year 3 will be 6.03%

per annum zero coupon rate for year 4 will be 8.06%

the calculation is shown in the image below:

jeff jeffy answered 2 months ago

The 1-year, 2-year, 3-year and 4-year zero rates are 2%, 3%, 4% and 5% per annum...

The 1-year, 2-year, 3-year and 4-year zero rates are 2%, 3%, 4% and 5% per annum (APR) with quarterly compounding/payment. a) What are the corresponding per annum zero rates with continuous compounding? b) What is today’s forward rate for an investment initiated one year from today and maturing 3 years from today? (Give your answer per annum with continuous compounding)? c) What is today’s forward rate for a one-year investment initiated three years from today? (Give your answer per annum with continuous...

Use the following information to answer Questions 6 and 7. The 1-, 2-, 3-, and 4-year...

Use the following information to answer Questions 6 and 7. The 1-, 2-, 3-, and 4-year oil forward prices are $60, $58.35, $57.40, and $55 per barrel, respectively. Your firm is thinking about starting up an offshore drilling station and needs to forecast revenue over the next 4 years. Assume the risk-free rate is 5.25% each year and initial costs are $150,000,000. 6. (1 point) If your firm expects to extract 1,100,000 barrels of oil per year and each barrel...

Part 1 Information for Year 1, Year 2, and Year 3 for the Andean branch of...

Part 1 Information for Year 1, Year 2, and Year 3 for the Andean branch of Powell Corporation is presented in the following table. The corporate tax rate in the Andean Republic changes drastically year-to-year. The U.S. corporate tax rate each year is 21%. Year 1 Year 2 Year 3 Foreign source income $75,000 $100,000 $100,000 Foreign (Andean) tax rate 15% 20% 22% Foreign taxes paid U.S. tax before FTC For Year 1, Year 2, and Year 3, what is...

part a . Let A = {1,2,3,4,5},B ={0,3,6} find 1. A∪B 2. A∩B 3. A\B 4....

part a . Let A = {1,2,3,4,5},B ={0,3,6} find 1. A∪B 2. A∩B 3. A\B 4. B \ A Part b . Show that if A andB are sets, (A\B)⊆A 2. A∪(A∩B)=A Part c. Determine whether each of these functions from Z to Z is one-to one 1. f(x)=x−1 2. f(x)=x2 +1 3. f(x) = ⌈x/2⌉ Part c. Let S = {−1,0,2,4,7}, find f(S) if 1. f(x)=1 2. f(x)=2x+1 3. f(x) = ⌊x/5⌋ 4. f(x)=⌈(x2 +1)/3⌉ Part D. Determine whether...

Part A: Use the following data to determine the order with respect to reactant A in the reaction 3 A + 4 B → 2 C

Experiment [A] [B] Initial Rate (M/s) 1 0.20 0.50 0.32 2 0.60 0.50 2.88 3 0.20 0.25 0.040 Part A: Use the following data to determine the order with respect to reactant A in the reaction 3 A + 4 B → 2 C Part B: Use the following data to determine the order with respect to reactant B in the reaction 3 A + 4 B → 2 C

Please use the following information for Questions 2, 3, and 4. To determine whether there was...

Please use the following information for Questions 2, 3, and 4. To determine whether there was a relationship between the region of the world that you live in and the amount of beer that you drink, suppose we took 3 samples of 25 people per region from Asia, Europe and America. 2) If we let µ1, µ2, and µ3 be the average calcium intake per day in milligrams for people with diagnosed osteopenia, osteoporosis or neither (healthy controls), respectively, the...

Apply ?̂2 and ?̂?operator on the following wavefunctions, a. ( 3 4? ) 1/2 ???? b....

Apply ?̂2 and ?̂?operator on the following wavefunctions, a. ( 3 4? ) 1/2 ???? b. ( 3 8? ) 1/2 ???? ? ?? c. ( 3 8? ) 1/2 ???? ? −?? What is the result? Which is these functions are eigen functions of both operators? Is there anything else you like to conclude?

Projects A and B have the following cash flows respectively: Year 0 1 2 3 4...

Projects A and B have the following cash flows respectively: Year 0 1 2 3 4 CFA −$2,050 $750 $760 $770 $780 CFB −$4,300 $1,500 $1,518 $1,536 $1,554 Both projects have a required return of 10.25%. What are NPV and IRR of the two projects? If project A and B are mutually exclusive, what is your decision with regard to accepting vs. rejecting each project? Why? What is the crossover rate?

Use these cash flows to answer the following questions: Year 0 1 2 3 4 5...

Use these cash flows to answer the following questions: Year 0 1 2 3 4 5 6 A (4,000) 800 1,400 1,300 1,200 1,100 1,000 B (2,000) 700 1,300 1,200 0 0 0 a. Calculate the NPV for projects A and B using a 20 percent discount rate (write the calculate keys that you use to get the answer). b Calculate the Equivalent Annual Annuity (EAA) for projects A and B using a 20 percent discount rate (write the calculate...

QUESTION: Use the information below to answer the following questions. YEAR 0 (now) 1 2 3...

QUESTION: Use the information below to answer the following questions. YEAR 0 (now) 1 2 3 4 5 6 PROJECT A - 25,950 5,009 -1,123 6,500 7,089 7,544 8,908 PROJECT B - 31,950 8,000 7,500 7,000 6,500 -2,123 5,500 (a) Compute the payback period for both projects. Using the payback method, which project will be accepted? (b) If the interest (discount) rate is 12.5 %, what is the net present value (NPV) for both projects? Which project will be accepted...

Question