Suppose the two-year interest rate is r2 with quarterly-compounding and 30/360 daycount. Suppose the price today of a ZCB maturing in 4 years is Z(0,4). Give a formula for the two-year forward two-year libor rate L0[2,4] in terms of r2 and Z(0,4).
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Suppose the two-year interest rate is r2 with quarterly-compounding and 30/360 daycount. Suppose the price today of a ZCB maturing in 4 years is Z(0,4). Give a formula for the two-year forward two-year libor rate L0[2,4] in terms of r2 and Z(0,4).
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- Suppose you have a loan of amount P, and you plan to pay off the debt in10 equal annual installments. Suppose the annual compounding rate is r. What is thepresent (t = 0) value of the 7th installment? (Express your answer in terms of thevariables in the problem P and r and simplify your answer.)Suppose the 1-year and 2-year OIS rates are 2% and 4%, respectively. Consider an OISswap with two years to maturity where you receive 3% and pay the floating reference ratewith principal 1 million. If the payments are made annually with annual compounding, what is the value of the swapConsider the following spot interest rates for maturities of one, two, three, and four years. r₁ = 4.3% 2 = 4.9% √3 = 5.6% r4 = 6.4% What are the following forward rates, where fkn refers to a forward rate beginning in k year(s) and extending for n year(s)? f2,1 = ? f3,1 = ? f2,2 = ?
- Consider a future value of $2,000, 8 years in the future. Assume that the nominal interest rate is 18.00%. Assume that there is semiannual compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with semiannual compounding. Assume that there is quarterly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with quarterly compounding. Suppose now that the cash flow of $2,000 occurs only 1 year in the future. Assume that there is monthly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with monthly compounding.If the compounding frequency is monthly and the discount factor=0.62026, what is the value of the corresponding annual interest rate? What is the corresponding continuous compounding annual interest rate if the discount factor remains at 0.62026?Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 6.10% r2 = 6.00% r3 = 5.80% r4 = 5.50% What are the following forward rates? Hint: f1, k refers to a forward rate for the period beginning in one year and extending for k years. fk,1 refers to a forward rate beginning in k years and extending for 1 year. f1,1 : f1,2 : f1,3 : f2,1: f3,1 :
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- Assume that at time 0 a sum L is lent for a series of n yearly payments. The rth payment, of amount xr, is due at the end of the rth year. Let the effective annual interest rate for the rth year be ir. Give an identity which expresses L in terms of the xr and ir.consider the following spot interest rates for maturities of one, two, three, and four years. r1=4.1%, r2=4.5% r3=5.2% r=6.0% what are teh following forward rates, where fk.1 refers toa forward rate beginning in the k years and extending for the 1 year?b) suppose that the market interest rate is 5%. Calculate the present value of the following. Show how your answer is obtained. Calculation using a formula, not using excel. i) A fixed payment loan with annual payments of $163 that matures in three years.