Assets and Interest Rates - Coursework Example


Extract of sample
Assets and Interest Rates

The higher the credit rating, the lower will be the spread between the US treasury yield and the interest rate of the corporate bond. Here we will assume that the credit rating of the company is AAA. So for a one year bond the rate will be US treasury yield plus 14 basis points. The interest rate will be 4.74 plus 0.14 i.e. 4.88%. Similar will be the calculation for an asset which is 5 year in length. The interest rate will be 5.03% (4.63 plus 40 basis points). For calculating the yield of an asset which is 15 year in length, we will use the rate of the closest matching maturity. 2. Discuss how the interest rate will be impacted if the bond is a government bond or a corporate bond.  A government bond is issued and backed by the government while a corporate bond is issued by businesses to raise money for business expenses such as expansions. ...Show more


Rating 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 30 yr Aaa/AAA 4.88 4.87 4.95 5.03 5.16 5.27 5.46 Aa1/AA+ 4.96 5.01 4.99 5.11 5.24 5.36 5.55 Aa2/AA 4.98 5.08 5.07 5.17 5.27 5.39 5.59 Aa3/AA- 4.99 5.1 5.08 5.21 5.31 5.4 5.65 A1/A+ 5.17 5.19 5.2 5.28 5.39 5.52 5.73 A2/A 5.2 5.22 5.22 5.3 5.41 5.54 5.77 A3/A- 5.24 5.25 5.25 5.35 5.44 5.57 5.8 Baa1/BBB+ 5.36 5.43 5.48 5.55 5.81 6 6.26 Baa2/BBB 5.39 5.51 5.56 5.6 5.88 6.1 6.33 Baa3/BBB- 5.46 5.56 5.58 5.65 5.94 6.18 6.39 Ba1/BB+ 6.59 6.66 6.73 6.78 6.95 7.14 7.31 Ba2/BB 6.69 6.76 6.83 6.88 7.05 7.24 7.41 Ba3/BB- 6.79 6.86 6.93 6.98 7.15 7.34 7.51 B1/B+ 7.39 7.46 7.53 7.78 8.15 8.54 9.01 B2/B 7.49 7.56 7.63 7.88 8.25 8.64 9.11 B3/B- 7.59 7.66 7.73 7.98 8.35 8…
Author : tremaine86
Save Your Time for More Important Things
Let us write or edit the coursework on your topic
"Assets and Interest Rates"
with a personal 20% discount.
Grab the best paper

Related Essays

Measuring the Sensitivity of a Bond's Price to Changes in the Market Interest Rates
It is a security issued to the public as a source of funds to the government or firms. If bonds are issued by the government, then the funds realized are used in provision of public goods. But the most important reason why governments issue bonds is to use the funds to carry out the fiscal policies in case the economy is in any kind of a macroeconomic problem.
6 pages (1500 words) Essay
Explain The Term Structure Of Interest Rates
For instance, a corporate treasurer is a borrower and he has to choose between short term and long term debt. Investors can be seen as lenders who lend their money by purchasing bonds (which can be either long term or short term) (Brigham and Ehrhardt, 2010).
7 pages (1750 words) Essay
Interest Rates Swa[s Require Markets to be Inefficient
Foreign exchange market comprises of an important integral component; interest rates. Interest rates help in determining the value of one currency in terms of another. Different currencies carry different values relative to the base currency, thereby allowing for cross border transactions internationally.
4 pages (1000 words) Essay
Comparing Mortgage Rates
These rates were then converted into effective annual rates. Lender 15 YR EAR 30 YR EAR Bank of America 3.500 3.905% 4.250 4.505% Lending Tree 2.75 2.97% 3.63 3.75% GMAC 3.250 3.555% 4.0 4.121% Chase Bank 3.625 3.789% 4.375 4.492% AmeriSave 2.750 2.991% 3.250 3.505% There are number of common mistakes individuals make when looking at quoted mortgage rates and shopping for mortgage rates.
3 pages (750 words) Research Paper
Interest rates and exchange rates (the details will be shown in instruction)
Covered Interest Rate Parity (CIRP) According to covered interest rate parity when there exists no arbitrage opportunity due to equilibrium, the use of forward contracts to minimise exposure of exchange rate fluctuations then the interest rate parity is said to be covered (Madura, 2011, p.223).
6 pages (1500 words) Assignment
Banking - Interest rates
Interest rate in Japan has been low over the past decade with indication that it will remain low. This paper reports on the effects of the low interest on the Japanese banking sector through discussing advantages and disadvantages of the low rates on banks.
3 pages (750 words) Essay
Introduction to Financial Markets - Forecasting interest rates
The worst thing, he says is that he cannot benefit from them to lower his monthly payments. Several years have passed after home price fell, his Long Island asset loan is too big relative to the value of the house. In this sense, the condition that Mr. Lieb is experiencing is a small-scale illustration of the forces placing much pressure on the financial markets and the economy.
6 pages (1500 words) Essay
Analyzing Pro Forma Statements
The significance of financial forecasting facilitates financial planning which is the determination of cash surplus or deficit likely to be faced in the near future, it facilitates control of entity expenditure. It also serves as a motivation to employees to achieve set targets if the forecasting has used targets and budgets.
2 pages (500 words) Assignment
Topic is stated in "Details" section
There were no middle managers; there were low production and people used traditional tools. Markets coordinated a high percentage of the economic activities, and the accounting systems were underdeveloped. However, the second period was so much different
6 pages (1500 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email