416 cheat - Forecast Int. Rates . E(Y Tin q )= [(1+Y q+T )...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Forecast Int. Rates . E(Y Tin q )= [(1+Y q+T ) (q+T) /(1+Y q ) q-1] T= bond type q= years from now Selling Contract , return of 8% comp. ann. Payment of one lump sum in 20 yrs. T-bonds with 20 yr maturity and positive coupon is 8.826%. T- bonds 0-coupon 20 yrs is 8.60% Customer pay $1M Cash today, what profit is realized today by seller? (1M/1.08 20 /1.043 40 Value of a forward contract= V spot +(1+R f ) n/365- V spot yield Value of a forward contract= V spot +(1+R f ) n/365 /(1+ann. Spot yield) n/365 Determine if a put is in the money Put Options Look up or review the strike price of the put option contract. The description of the option contract looks like: WMT March 57.50 Put. This is a put option on Walmart that has a strike price of $57.50 and expires in March. The strike or exercise price of this option is $57.50. Look up the current share price of the underlying stock. For this example, Walmart is currently quoted at $54.55. Determine if the put option is in the money. To be in the money, the current share price of the underlying stock must be below the strike price of Determine if the put option is in the money....
View Full Document

This note was uploaded on 06/29/2011 for the course FIN 322 taught by Professor Zhu during the Spring '11 term at Oakland University.

Page1 / 2

416 cheat - Forecast Int. Rates . E(Y Tin q )= [(1+Y q+T )...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online