Zero coupon cd
[DOC File]Bonds, Instructor's Manual
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The coupon rate affects the timing of cash flows from a bond. Thus, a 20-year bond with a zero coupon produces no cash flow until it matures, but a 20-year, $1,000 bond with a 8.5% coupon produces $1,700 of interest income over its life versus $1,000 at maturity. The interest cash flows are …
[DOCX File]CIS200 – Homework #1 – Simple Formulas & Functions
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(1 point) You decided to put off buying the car and are have put the $9500 into a zero coupon bond that accrues 5% interest each year (compounded annually) at the beginning of each year. These bonds make no payments until they mature in two years. What is the Future Value of this bond after two years. = FV(.05, 2, 0, -9500, 1)
[DOC File]Chapter Eight - NYU
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The assets are funded with demand deposits of $18 million, a $162 million CD and $20 million in equity. The loan portfolio has a maturity of 2 years, earns interest at the annual rate of 7 percent, and is amortized monthly. The bank pays 7 percent annual interest on the CD, but the interest will not be paid until the CD matures at the end of 2 ...
[DOCX File]Chapter 7 - Spreadsheets: Financial Functions
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Coupon bonds work in this way, where the interest is always removed after each period. However, most financial instruments such as savings accounts, zero-coupon bonds, certificates of deposit, mortgages, and car loans usually assume that the interest from previous periods is either added or subtracted to the principal amount each period.
[DOC File]Investment Alternatives
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Coupon bonds- bonds that are bearer bonds (no registered name) to collect interest payments must cut an interest coupon from the bond. Zero Coupon bonds. Price is quoted as % of par. Trade on an accrued interest basis. Bond purchaser must pay the bond seller the price of the bond plus interest earned but not paid since the last interest payment
[DOC File]Chapter 10
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Zero-coupon bonds are bonds that pay no coupons, but do pay a par value at maturity. ... the one-year CD might be a reasonable "middle-ground" choice. The CD provides a higher return than the money market fund, unless rates rise considerably. On the other hand, the CD has far less interest rate risk (that is, a much lower duration) than the 20 ...
[DOC File]Finance - BrainMass
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Anticipating the need to fund these pensions, the firm bought zero coupon U.S. Treasury Trust Certificates maturing in five years. When these instruments were originally issued, they were 12. percent coupon, 30-year U.S. Treasury bonds. The stripped Treasuries are currently priced to yield 10 percent. Their total maturity value is $6,000,000.
[DOC File]Chapter Nine - NYU
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Hands Insurance Company issued a $90 million, 1-year, zero-coupon note at 8 percent add-on annual interest (paying one coupon at the end of the year). The proceeds were used to fund a $100 million, 2-year commercial loan at 10 percent annual interest.
[DOC File]Chapter One
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zero coupon bonds. ANSWER: C. All of the following are true regarding futures contracts except. they are marked to market. they require payment of a performance bond. they are a legally enforceable promise. they are regulated by the SEC. ANSWER: D. A security giving you the right to sell is a . put option. call option. short futures contract.
Exam-type questions
a. 20-year, zero coupon bond. * b. 10-year, zero coupon bond. c. 20-year, 10 percent coupon bond. d. 20-year, 5 percent coupon bond. The longer the maturity of a bond, the more of an effect a change in interest rates will have on it. The reason for this is that the price change is compounded into the bond price for more periods.
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