Question

In: Finance

The following table shows the prices of a sample of U.S. Treasure STRIPs in August 2020....

The following table shows the prices of a sample of U.S. Treasure STRIPs in August 2020. Each strip makes a single payment of $1,000 at maturity without any coupons. (10 points)

Maturity

Price (%)

August 2021

95.53

August 2022

91.07

August 2023

86.20

August 2024

81.08

​​​​​​​Calculate the annually compounded, spot interest rate for each year.

Spot rate for 1-year strip =

Spot rate for 2-year strip =

Spot rate for 3-year strip =

Spot rate for 4-year strip =

  1. Is the term structure upward or downward sloping or plat? Explain.
  1. Calculate the annually compounded, one-year forward rate of interest for August 2022.

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The following table shows the prices of the Treasury STRIPS in December 2019. Each STRIP makes...
The following table shows the prices of the Treasury STRIPS in December 2019. Each STRIP makes a single payment of $1,000 at maturity. Maturity Price(%) December 2020 97.418 December 2021 94.259 December 2022 90.851 December 2023 86.976    1.Calculate the annually compounded, spot interest rate for each year. Maturity Spot Interest Rate December 2020 __________ % December 2021 __________ % December 2022 __________ % December 2023 __________ % 2.What will be the 2-year spot interest rate in two years if...
The table shows the prices (in dollars) for a sample of automobile batteries. The prices are...
The table shows the prices (in dollars) for a sample of automobile batteries. The prices are classified according to battery type. At α = .05α = .05α = .05, is there enough evidence to conclude that at least one mean battery price is different from the others? (Assume the samples are random and independent, the populations are normally distributed, and the population variances are equal) Battery Type A 110 100 125 90 120 Battery Type B 280 145 180 175...
Problem 5 (): Below is a table of the prices of a set of Treasury STRIPS...
Problem 5 (): Below is a table of the prices of a set of Treasury STRIPS (per $1000 in face value). Recall that Treasury STRIPS are zero-coupon bonds with no risk of default. Maturity (in years)                          Price (per $1000 in face)                              $980.39 $951.81 3                                                          $915.14 4                                                          $871.44 5                                                          $821.93 6                                                          $767.90 There is a 5-year 5% coupon corporate bond with a face value of $1000 that pays its coupon once a year. If the price of this bond is valued...
The following shows the unadjusted Trial Balance of Services as at 31 August 2020 is as...
The following shows the unadjusted Trial Balance of Services as at 31 August 2020 is as follows:    Services Unadjusted Trial Balance as at 31 August 2020 Debit Credit RM RM Cash at Bank 70,400 Account Receivable 100,600 Provision for Doubtful Debts 4,000 Premises 220,000 Furniture 40,000 Accumulated Depreciation - Depreciation 8,000 Accounts Payable 80,000 Unearned Revenue 24,000 Loan @ 6% interest 100,000 Capital, Services 200,000 Drawings 3,000 Revenue 103,000 Prepaid Insurance 36,000 Utility expense 21,000 Salary Expense 25,000 Interest...
The following table shows the means of transportation to work for the U.S. in 1990 and...
The following table shows the means of transportation to work for the U.S. in 1990 and 2000. The data values in the columns of “Percentage in 1990” and “Percentage in 2000” are the percentages of each travel mode in 1990 and in 2000 respectively using two independent and random samples. We want to do a hypothesis test and see whether the travel modes have been significantly changed from 1990 to 2000. Table: The means of transportation to work for the...
The following table shows the prices of cars in the lineup of a certain automobile manufacturer,...
The following table shows the prices of cars in the lineup of a certain automobile manufacturer, along with the profit resulting from the sale of each car: Sales Price Profit ($44,000, $9,500) ($48,000, $9,600) ($54,000, $12,500) ($56,000, $12,600) ($62,000, $14,000) ($64,000,, $15,000) ($68,000, $17,000) Mean Sales Price = $56,571 Standard Deviation Sales Price = $8,696 Mean Profit = $12,886 Standard Deviation Profit = $2,743 Correlation = .98 (a) Determine the slope of the least square regression line that predicts the...
The following table shows the U.S. rates of personal tax as of the year 2016, and...
The following table shows the U.S. rates of personal tax as of the year 2016, and these tax rates presented in this table are marginal tax rates. (This is Table 3.7 on Page 74 of your textbook.) Single Taxpayers Married Taxpayers Filing Joint Returns Tax Rate (%) 0-$9,275 0-$18,550 10.0 $9,276-$37,650 $18,551-$75,300 15.0 $37,651-$91,150 $75,301-$151,900 25.0 $91,151-$190,150 $151,901-$231,450 28.0 $190,151-$413,350 $231,451-$413,350 33.0 $413,351-$415,050 $413,351-$466,950 35.0 $415,051 and above $466,951 and above 39.6 Based on this table, answering the following questions:...
The following table shows the U.S. rates of personal tax as of the year 2016, and...
The following table shows the U.S. rates of personal tax as of the year 2016, and these tax rates presented in this table are marginal tax rates. (This is Table 3.7 on Page 74 of your textbook.) Single Taxpayers Married Taxpayers Filing Joint Returns Tax Rate (%) 0-$9,275 0-$18,550 10.0 $9,276-$37,650 $18,551-$75,300 15.0 $37,651-$91,150 $75,301-$151,900 25.0 $91,151-$190,150 $151,901-$231,450 28.0 $190,151-$413,350 $231,451-$413,350 33.0 $413,351-$415,050 $413,351-$466,950 35.0 $415,051 and above $466,951 and above 39.6 Based on this table, answering the following questions:...
The following table shows the nominal returns on U.S. stocks and the rate of inflation. Year...
The following table shows the nominal returns on U.S. stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 2010 13.6 3.7 2011 8.6 2.8 2012 16.0 3.3 2013 4.1 4.4 2014 −40.2 .4 a. What was the standard deviation of the nominal market returns? (Do not make the adjustment for degrees of freedom described in footnote 18.) (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to...
The following table shows the nominal returns on U.S. stocks and the rate of inflation. Year...
The following table shows the nominal returns on U.S. stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 2010 11.7 2.2 2011 8.6 3.4 2012 15.5 2.9 2013 5.7 4.3 2014 −44.2 .3 a. What was the standard deviation of the nominal market returns? (Do not make the adjustment for degrees of freedom described in footnote 18.) (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT