Superb Professors

(WEEK 6 AND WEEK 8):a) Explain the difference between defined benefits and accumulation superannuationplansb) Given a $1000 par value bond has an 8% coupon (semi-annual payments) rate, a 5year maturity, and similar bonds are yielding 10%. Calculate the percentage change inprice of the above mentioned bond if market interest decrease by 50 basis points.c) Given the current interest rate for a 5 years term loan is 6 % pa (compoundedannually) and the current interest rate for a 4 years term loan is 5.5% pa (compoundedannually). Estimate the one year forward rate starting 4 years from today.(WEEK 8):a) A bank agrees to buy T-bills from a securities dealer for $985,250, andpromises to sell the securities back to the dealer in 4 days for $985,575.Calculate the yield on this reverse repo for the bank. Why is this a reverserepo? b) Calculate the bank discount rate on a $100,000 face value T-bill priced at$96,500, maturing in 180 days.(WEEK 2 AND WEEK 9):a) What characterises a market exhibiting market depth and market resilience?b) What is the value of a stock expected to pay a constant $3.50 dividend eachyear forever if the market required rate of return is 18%?(WEEK 8 AND WEEK 10):a) A $1000 bond with a 7.5% coupon rate, interest paid semi-annually, andmaturing in six years is currently yielding 8% in the market. What is thecurrent price of the bond?b) Given the current interest rate for a 10 years term loan is 7 % pa (compoundedannually) and the current interest rate for a 6 years term loan is 5.5% pa(compounded annually), estimate the two year forward rate starting 6 yearsfrom today.

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