Question 96 bond pricing, zero coupon bond, term structure of interest rates, forward interest rate
An Australian company just issued two bonds paying semi-annual coupons:
- 1 year zero coupon bond at a yield of 8% pa, and a
- 2 year zero coupon bond at a yield of 10% pa.
What is the forward rate on the company's debt from years 1 to 2? Give your answer as an APR compounding every 6 months, which is how the above bond yields are quoted.
Which one of the following bonds is trading at a premium?
Question 278 inflation, real and nominal returns and cash flows
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year.
Which of the following statements about short-selling is NOT true?
Question 667 forward foreign exchange rate, foreign exchange rate, cross currency interest rate parity, no explanation
The Australian cash rate is expected to be 2% pa over the next one year, while the US cash rate is expected to be 0% pa, both given as nominal effective annual rates. The current exchange rate is 0.73 USD per AUD.
What is the implied 1 year USD per AUD forward foreign exchange rate?
Question 707 continuously compounding rate, continuously compounding rate conversion
Convert a 10% effective annual rate ##(r_\text{eff annual})## into a continuously compounded annual rate ##(r_\text{cc annual})##. The equivalent continuously compounded annual rate is:
In the home loan market, the acronym LVR stands for Loan to Valuation Ratio. If you bought a house worth one million dollars, partly funded by an $800,000 home loan, then your LVR was 80%. The LVR is equivalent to which of the following ratios?
Below is the Australian central bank’s cash rate.
From 2011 to 2017 the Australian central bank has implemented: