What is nought rate residence structure?
I have a nouns question that I don't really take to mean.. can someone explain to me what is zero rate occupancy structure?Below is the actual question.
Consider 3 nil coupon bonds; B(0,1)=0.95, B(0,2)=0.90, and B(0,3)=0.85,
what is the zero rate occupancy structure?
Answers: I believe you are being tested to see if you can derive a relinquish curve (another word for term structure) using nil coupon bonds. In this case, your bonds are zilch coupon bonds meaning in attendance are no interim cash flows, the merely cash flows are the initial investment (at a discounted price) and the the later life value (at par). Another process of expressing is a zero coupon bond is call a bullet.
Your first bond is worth 95 cents on the dollar based on the 0.95 quote. Since it have to accrete to par (or 1 dollar) at maturity, that bond have an yield of 5.26%. You can solve this using the holding time of year return (HPR) formula.
(FV/PV)^(1/N) - 1 = HPR where
FV is the adjectives value
PV is the present helpfulness
N is number of periods
and you subtract 1
(1/.95)^(1/1) - 1 = 5.26%
For the second bond specifically worth 90 cents on the dollar, the yield is 5.41%
(1/.90)^(1/2) - 1 = 5.41%
For the third bond that is to say worth 85 cents on the dollart, the yield is 5.57%
(1/.85)^(1/3/) - 1 = 5.57%.
So the concede curve is as follows:
1 year is 5.26%
2 years is 5.41%
3 years is 5.57%
By the way, the previous poster JChan49e calculated the implied forward rates. I don't deem the question is asking for implied forward rates, but if it did, the following should relieve explain what JChan49e did (JChan49e was using a shortcut and is not as accurate)
In the first length, you earned 5.26%. Now you own to calculate the implied 1-period forward rate at the ending of the 1st period and that will be the 1-period verbs for period 2. That is to vote since you know the yield of 5.26% for 1-period return and you know the relinquish of 5.41% for the 2-period return, what must be the implied reinvestment 1-period rate such that you are indifferent about investing surrounded by a one-period rate, then re-investing for another 1-period rate so you can earn 5.41% for the two period.
To solve for the implied 1-period rate 1 period from presently, you would use the following equation:
[(1.0526)*(1+x)]^(1/2) = 1.0541
1.0526*(1+x) = (1.0541)^2
1.0526*(1+x) = 1.1111
1+x = 1.0556
x = 5.56%
Then you would do the same for the implied 1-period forward rate 2 period from now.
[(1.0526)*(1.0556)*(1+y)]^(1/3) = (1.0557)
(1.0526)*(1.0556)*(1+y) = (1.0557)^3
(1.0526)*(1.0556)*(1+y) = 1.1766
(1+y) = 1.0589
y = 5.89%
Therefore, if the cross-examine is about implied forward rates, the give up on the first 1-period bond is 5.26%, the yield on the second 1-period bond (1-period from now) is 5.56% and the surrender on the third 1-period bond (2-periods from now) is 5.89%.
Good luck.
So the above means that:
1 Year Zero coupon bond is trading at $0.95 (Yield is 1/.95=5.26%)
2 Year Zero coupon bond is trading at $0.90 (Yield is 1/.9*.95=5.56%)
3 Year Zero coupon bond is trading at $0.85 (Yield is 1/.85*.9=5.88%)
So the residence structure will have the years (1,2,3) on the x-axis and Yields on the y-axis. A residence structure explains how much yield is available for a range of lengths of bonds.
What is the ticker symbol for Gold, Silver, Platinum, Tanzanite, Diamond?
i am just starting out contained by learning in the order of Stocks and trading. I got the CoolTick program to own a scrolling marque of Stocks move across the top of my screen but I want to put in Precious Metals to my view as very well.does anyone know what Yahoo! Finanace website uses to track these Precious Metals:
Gold, Silver, Platinum
and Gems:
Diamonds, Rubies, Tanzanite
any help would be greatly appreciated.
Answers: The following Internet Link have several symbols listed: http://futuresource.quote.com/markets/ma...
Gold is GC followed by a income letter for the futures month and a number for the year. So example: GCZ8 process Gold December 2008.
Silver is SI so following the same wording as above: SIZ8 be going to Silver December 2008.
PT is platinum. Just put your cursor on the Symbol on the link above and pop up will describe exactly what any symbol medium.
There are no symbols for Tanzanite and Diamonds as they are not constants than can be traded easily using contracts followed beside a ticker. You should ask another question just about cut and uncut gems to obtain source on those prices. You can individual trade gems with lolly buying as there is no bearing to speculate any other way. Once purchased they are not a extremely liquid investment approaching the metals futures markets are.
Try these symbols - QVC or HSN. they appear to follow jewelry.
Precious Metals trade as futures on the Chicago Board of Trade ( www.cbot.com ) or Merc. not on stock exchanges or OTC.
What are wholesale funds?
Also , how can any Financial Institution’s net interest income reorganize because of the fall contained by interest rates for wholesale funds.Answers: Wholesale funds are managed investment vehicle which pool investors’ funds and are invested in specific asset classes such as currency, fixed interest and Australian shares.