My pension plan will pay me$5,000 once a year for a 10 -year period. The first payment will come in exactly five years. The pension fund wants to immunize its position.

a. What is the duration of its obligation to me? The current interest rate is 8% per year.

b.If the plan uses 3-year and 30-year zero-coupon bonds to construct the immunized position, how money ought to be placed in each bond?

c.What will be the face value of the holdings in each zero?

My Bloomberg terminal shows the simple interest rates
          One year:        1.430%
          Two year:        3.788%
          Three year:     4.926%
    Four year:       5.720%
    Five year:        5.967%
If the yield curve is formed solely from expectations then the market expects the one year rate one year from now to be

• : 6.201 %
• the one year rate two years from now to be 7.240 %
• the one year rate three years from now to be 8.138 %
• and the one year rate four years from now to be 6.961%

Please tell me how to get to the bolded answers. Thank you so much!

Problem Statement

Design a class named Car that has the following fields:

• year: The year field is an integer that holds the car’s year.

• make: the make field is a String that holds the make of the car.

• speed: the speed field is an integer that holds the car’s current speed.

In addition, the class should have the following constructor and other methods:

• Constructor: the constructor should accept the car’s year >model and make as parameters. These values should be assigned to the object’s yearand make fields. The constructor should also assign 0 to the speed field.

• Accessors: design appropriate accessor methods to get the values stored in an object’s year, make, and speed fields.

• accelerate: the accelerate method should add 5 to the speed field each time it is called.

• brake: the brake method should subtract 5 from the speed field each time it is called.

Your solution must include these components:

1. UML Class diagram

2. Flowchart

3. Pseudo-code (Gaddis Pseudo Code)

4. Program Coded (Java Code)

What will you still owe after the 13th year of a 15-year, $450,000 mortgage at 4.35% APR if you only make the minimum monthly payments?

A. $77,826

B. $114,827

C. $791,338

D. $78,201

Please work out the problem!

A bank with a two-year horizon has issued a one-year certificate of deposit for $60 million at an interest rate of 2 percent. With the proceeds, the bank has purchased a two-year Treasury note that pays 4 percent interest.

What risk does the bank face in entering into these transactions?

Instructions: Enter numeric responses as whole dollar values.

The bank faces the risk that the short-term interest rate will  (Click to select)  fall  rise  before the second year,  (Click to select)  increasing  decreasing  the amount of interest the bank has to pay on the CD, but leaving the interest income that the bank receives from the Treasury note unchanged. With an interest rate of 2 percent for the CD and 4 percent for the Treasury note, the bank’s annual interest income is $  and the bank’s annual interest expenses are $  . The bank makes a profit of $  .  

What would happen if all interest rates were to rise by 1 percent?

If the interest rate rises 1 percent, the bank's profit in the second year falls to $  .

Multiple Choice

• $2,618,820

• $2,125,200

• $2,901,180

• $2,749,762

• $2,487,879

Discounted Cash Flows

A. choose between a perpetuity of $45,000/year inflating at 2%/year and a lump sum payment of $1,255,000. Use a 5.5% discount rate. Use the box to explain your choice.

B. run NPVs and IRRs for three airplane fuel pumps. Use a 12% discount rate: Pump A costs $35,000 and saves the firm $5,000 each year for years 1-15 Pump B costs $35,000 and saves the firm $4,500 each year for ever Pump C costs $35,000 and saves $4,000 in year 1; this saving continues for ever, increasing 4% per year

C. provide a 25% guaranteed cash flow IRR to an airline flying to your airport. The airline's cash flows are minus $1 million at the start and positive $371,739 each year for years 1-4. Calculate the subsidy to be paid at the start. Explain your answer in the box provided.

D. calculate the implicit interest rate (IRR) of a computer lease. The computers cost $30,000 at the start and pay a yearly lease of $12,000 for years 1-3. The salvage value is $1,000 at the end of year 4. Explain your answer in the box provided. If the firm can borrow at 8.5% from the bank, should it borrow from the bank or lease?

Weismann Co. issued 14-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 9 percent, what is the current bond price?

1) The yield on a one-year Treasury security is 4.9200%, and the two-year Treasury security has a 6.6420% yield. Assuming that the pure expectations theory is correct, what is the market’s estimate of the one-year Treasury rate one year from now?

2) Recall that on a one-year Treasury security the yield is 4.9200% and 6.6420% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.35%. What is the market’s estimate of the one-year Treasury rate one year from now?

3) Suppose the yield on a two-year Treasury security is 4.0%, and the yield on a five-year Treasury security is 5.7%. Assuming that the pure expectations theory is correct, what is the market’s estimate of the three-year Treasury rate two years from now?

Suppose that Ramos contributes $6000/year into a traditional IRA earning interest at the rate of 4%/year compounded annually, every year after age 35 until his retirement at age 65. At the same time, his wife Vanessa deposits $4700/year into a Roth IRA earning interest at the same rate as that of Ramos and also for a period of 30 years. Suppose that the investments of both Ramos and Vanessa are in a marginal tax bracket of 35% at the time of their retirement and that they both wish to withdraw all of the money in their IRAs at that time.

(a) After all due taxes are paid, who will have the larger amount?

RamosVanessa   

(b) How much larger will that amount be? (Round your answer to the nearest cent.)
$