Referring to the blue yield curve below, which theories of term structure can be used to explain the segment of the yield curve on the right of the dividing (red) line, taking into account the country's macroeconomic and market conditions?
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Referring to the blue yield curve below, which theories of term structure can be used to explain the segment of the yield curve on the right of the dividing (red) line, taking into account the country’s
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- Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?Suppose Ford Motor Company issues a five year bond with a face value of 5,000 that pays an annual coupon payment of $150. What is the interest rate Ford is paying on the borrowed funds? Suppose the market interest rate rises from 3 to 4 a year after Ford issues the bonds. Will the value of the bond increase or decrease?Obtain weekly data from Refinitiv Eikon and plot the interest rates (bid and ask mid- rate) on 2-year commonwealth government bond (AU2Y-TBOND) and 10 yearcommonwealth government bond (au 10Y-TBOND) from January 2020. Determine theshape of the yield curve by using one of the interest rate theories you know and shareyour opinion on whether the Australian economy is heading for a boom or for arecession. Explain your choice.
- AN2141 a. liko? b. 20% 125 10% 14% 12% 10% IN 24 Turkey Yield Curve - 6 Jun 2023 6Y Residual Maturity BY 111 T 10Y -Turkey (0 Jun 2023) 1M ago OM ago Are the three yield curves depicted here "normal" yield curves? What does the normal yield curve look What does the shape of the current Turkish yield curve tell you about the expectations of market participants regarding inflation?2. Assume a bond with the following characteristics: face value = $1000; maturity = 5 years; N yearly coupon payments = $100. a. If the current price of this bond is $850, state what the formula is to calculate the bond's yield to maturity and state the range of interest rates where the yield to maturity should fall b. If you purchased this bond at face value and held it for 1 year, when you resold it for $850, what is the bond's rate of return?6. An investor purchases a 30-year U.S. government bond for $840. The bond’s couponrate is 10 percent and, it still had twelve years remaining until maturity. If the investorholds the bond until it matures and collects the $1000 par value from the Treasuryand his marginal tax rate is 25 percent (we assume that the bond is taxable), what willbe his after-tax (effective) yield to maturity? Make sure to show your work.
- F4 % ht© 2003-2022 International Academy of Science. All Rights Reserved. T What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $900, if it pays 8% fixed interest for the duration of the bond? yield = [?] % 5 Give your answer as a percent rounded to the nearest hundredth. F5 F6 6 Hint: yield - interest paid price paid & F7 7 米 F8 DELL 8 F9 ( 9. prtsc F10 Enter ti home F11 end F12 Insert +11.Following the COVID-19 pandemic, central banks have committed to keepingshort-term interest rates low to stimulate economies and financial markets, evenas the recovery gains traction. Discuss the implications of this commitment by thecentral-bank on a Takaful Operator’s investment performance and providerecommendations on how it should restructure its asset classes so to continuemeeting expected returns?4-4The federal government (1) encouraged the development of the savings and loanindustry, (2) virtually forced the S&L industry to make long-term, fixed-interest-rate mortgages, and (3) forced S&Ls to obtain most of their capital asdeposits that are withdrawable on demand. a.Would the S&Ls be better off if rates are expected to increase or to decreasein the future? b.Would the S&L industry be better off if the individual institutions sold theirmortgages to federal agencies and then collected servicing fees or if theinstitutions held the mortgages that they originated?
- The remarkable thing about the events described in the article is that the yield an the 3-month T-bill was briefly negative. To see how this could haroen, consider the relationship between bond prices and bond yields. A 3-month T-bill with a maturity value of $1,000 is just a piece of paper that entities the holder to $1,000 in three months. For example, if you were to buy a 3-month T-bill on September 24, 2008, with a maturity value of $1,000 and 90 days left to maturity, the U.S. government would pay you $1.000 on December 23, 2008. In general, the price of a bond is less than its maturity value. That is, if you are going to give up a certain amount of money for the duration of the bond, you expect to be paid for this loss of liquidity and compensated for inflation that could reduce the value of the repayment at the end of the period. Therefore, a piece of paper entitling you to $1,000 on December 23 would usually be worth less than $1,000 on September 24. The yield on a bond is a…ADVANCED ANALYSIS To fund its wars against Napoleon, the British government sold consol bonds. These bonds were called "perpetuities" because they would pay £4 every year in perpetuity (forever). Instructions: Enter your answers rounded to 1 decimal place. a. If a citizen could purchase a consol for £50, what would the consol's annual interest rate be? 12.0 * percent What if the price were £10O? 6.0 8 percent What if the price were £200? 3.0 8 percentZambian banks have been using the Basel I framework for purposes of determiningregulatory capital. You work for a Zambian commercial bank and your Chief ExecutiveOfficer (CEO) has just received communication from the Bank of Zambia (regulator) tothe effect that come January 2020, all banks will be required to comply with theprovisions of the Basel Il framework for purposes of regulatory capital computation.Under the standardized approach of Basel Il, is the need to use External creditassessments. In this vein, your CEO has requested you to provide him with a briefwrite-up by answering the questions below. This is will help him understand the conceptof external credit assessment institutions as envisaged under the Basel Il framework.A. What is an External Credit Assessment Institution?B. Outline and describe three types of External Credit Assessment Institutions. Giveexamples. C. Explain why market participants use and rely on External Credit AssessmentInstitutions.