Working for GLB Ltd. Treasury Division, an Australian exporter of airport surveillance
systems, one day you are asked to find an avenue to invest your company’s surplus funds
over one year. Based on the in-house research, your company anticipates a 1% increase in
the curve in six months. The 6-month and 1-year zero-coupon rates are respectively 3% and
3.2%. After doing some research yourself, you find two different opportunities:
your company can buy the 1-year zero-coupon T-bond and hold it until maturity;
or your company can choose a rollover strategy by buying the 6-month T-bill, holding
it until maturity, and buying a new 6-month T-bill in six months, and holding it until
maturity.
1. Calculate the annualized total return rate of these two strategies assuming that your
company’s anticipation is correct.
2. Same question when interest rates decrease by 1% after six months.
Hi !
I am a 'Dean Scholarship' recipient for (MBA in Finance) business graduate studies from NYU Stern, USA. I am CFA (USA) charter holder.
I have fully solved J C Hull for Derivatives.
I am expert in writing financial research reports and am part of JPMC (equities research). I have access to Bloomberg, Financial Times, Wall Street Journal and Thomson Financial databases.
I am a professional Financial Analyst holding years of experience in Bonds Valuation and Discount Rate Analysis. I will be happy to discuss further regarding how I am highly suitable for this project.
Hi there,
I am interested in your project. Can you share the share the full question as the requirement at no. 2 is not clear?
Regards,
Jeetendra Chaurasia
Hello, i can solve this problem and your other problems that are related to Finance and Accounting step by step. kindly chat with me for more details. looking forward to hear from you!
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