Question
In: Finance
Suppose that a company has a series of liabilities with the due dates as follows:: In...
Suppose that a company has a series of liabilities with the due dates as follows:: In 6 months: $2,000,000, In 1 year: $2,200,000, In 1.5 years: $2,500,000, In 2 years: $3,200,000, In 2.5 years: $3,700,000, In 3 years: $4,300,000, In 3.5 years: $4,700,000, In 4 years: $5,100,000. The company is considering investing in four different bonds: (1) a 1-year Treasury Bill with a face value of $1,000 and no coupon, (2) a 2-year Treasury note with a face value of $1,000 and an annual coupon rate of 1.5%, (3) a 3-year Treasury note with a face value of $1,000 and an annual coupon rate of 1.90%, and (4) a 5-year Treasury note with a face value of $1,000 and an annual coupon rate of 2.30%. All Treasury notes make 2 (semi-annual) coupon payments per year. The yield to maturity on all bonds is 1.45%. How many of each of these bonds the company should buy to be fully funded and be immunized against interest rate risk? please step by step in excel!
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years....
A company has liabilities of $10,000 due in 1 year and $20,000
due in 2 years. The company would like to cash flow match these
liabilities with a combination of the following assets: a 2-year
bond with annual coupons of 5% yielding 4% a 1-year bond with
annual coupons of 6% yielding 3% What is the par value of the
1-year bond that should be purchased to cash flow match this
portfolio? 8,300 8,500 8,800 9,000 9,400
A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years....
A company has liabilities of $10,000 due in 1 year and $20,000
due in 2 years. The company would like to cash flow match these
liabilities with a combination of the following assets:
a 2-year bond with annual coupons of 5% yielding 4%
a 1-year bond with annual coupons of 6% yielding 3%
What is the IRR on the asset portfolio created?
3.00%
3.20%
3.40%
3.60%
3.80%
Sadat company LTD has two bills payable of $55,000 and $60,000 with due dates of 30th...
Sadat company LTD has two bills payable of $55,000 and
$60,000 with due dates of 30th June and 31st July 2020
respectively. The company wishes to arrange with it's bankers for
any necessary re-financing in advance:
a) to pay the bills on their due dates
b) to provide a minimum end of month cash balance of $15,000.
You are also given the following information:
i) The projected sales and purchases
SALES
($).
PURCHASES. ($)
March. 65,000
April.
90,000.
April.
57,000...
A company has liabilities of $2,000 and $5,000 due at the end of years 1 and...
A company has liabilities of $2,000 and $5,000 due at the end of
years 1 and 3 respectively. The company can purchase a 1-year
$1,000 par value zero-coupon bond with an annual effective yield of
5.6% and a 3-year $1000 par value zero-coupon bond. If the cost of
exactly matching the liabilities is $6,068.36, what is the
effective yield on the 3-year bond?
Show all works, and please show ur work it with math steps and
illustrations instead of excel...
A company has liabilities of $1800 and $2150 due at the end of years 1 and...
A company has liabilities of $1800 and $2150 due at the end of
years 1 and 2 respectively. The only investments available are
1-year 5% annual coupon bonds and 2-year 6% annual coupon bonds and
both redeemable at par and with an effective yield of 3%.
What is the total cost to the company in order to exactly
(absolutely) match the assets and liabilities at a 3% annual
effective rate?
Company ABC has liabilities of 20,000, 50,000, and 70,000 due at the end of years 1,...
Company ABC has liabilities of 20,000, 50,000, and 70,000 due at
the end of years 1, 2, and 3 respectively. The company would like
to exactly match these liabilities using the following assets:
A one-year zero coupon bond with a yield of 4%
A two-year zero coupon bond with a yield of 5%
A three-year coupon bond with annual coupons of 6% and a yield
of 5.5%
What is the total cost of the asset portfolio that will match
the...
Consider the following information on job times and due dates (in hours). Job Job Time Due...
Consider the following information on job times and due dates
(in hours). Job Job Time Due Date A 4.00 8.00 B 1.50 5.00 C 4.50
9.00 D 4.25 17.00 E 2.25 6.00 You are asked to determine the
processing sequence using Shortest Processing Time (SPT) and
Earliest Due Date (EDD) rule; and to decide which sequence is
better for average job flow time and the average job tardiness
performance measures. FORMAT FOR ENTRIES: • Sequence should be
entered in the...
The following is an excerpt (with dates changed) from Against the Grain, a series of recommendations...
The following is an excerpt (with dates changed) from
Against the Grain, a series of recommendations by the
State Comptroller of Texas on how to “save” $4.5 billion and
thereby balance the state’s budget:
Require an Annual August Remittance of One-Half of August’s
Sales Tax Collections by Monthly Taxpayers. The Legislature should
require sales taxpayers to remit half of August’s collections
during that month.
Background
Currently, sales tax payments are remitted either monthly,
quarterly, or annually. They also may be...
In Excel: How do I turn a series of dates into a sequence of numbers (example...
In Excel: How do I turn a series of dates into a sequence of
numbers (example 1,2, 3)?
Al Diwan Dates is a supplier of dates in Dakhliya region. The Business has been expanded...
Al Diwan Dates is a supplier of dates in Dakhliya
region. The Business has been expanded to produce Omani Halwa and
has a recently set up a retail store in Nizwa Grand Mall. The
business in this new store is pretty good and so there is lot of
cash and bank transactions during each month. In the month of April
2020 AL Diwan Dates has observed that some of the entries made in
the cash book and bank book are...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par...
- What is the difference among the principles of modularization, abstraction, encapsulation, and separation of interface and...
- An investment project costs $20,100 and has annual cash flows of $4,400 for six years. ...
- PUT IN JAVA PROGRAMMING The StockB class: Design a class named StockB that contains the following...
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
- In the article from Forbes notes that the goal of a leader is not to clone...
- Many people keep time using a 24 hour clock (11 is 11am and 23 is 11pm,...
ADVERTISEMENT