Final examination Fixed Income 2015
Prof. S. Abraham Ravid
Please answer all questions. I am available in school (Monday afternoon probably 2-6) or
via email or phone- but please do not count on instantaneous responses. I am providing a
word document- if
Assignment # 3 Fixed income, Fall 2015, Prof. S. A. Ravid
The treasury auctions off $5 billion worth of debt. Assume that the following bids are placed - bidder A
requests 2 billion at 7.5%, bidder B wants 2 billion at 7.7% and bidder C 2 billi
Fixed Income Review:
If a bond is bought at a discount the gain is treated as interest income.
Tax Exempt Yield/ (1- Tb) if the yield is .06 and the tax rate is .28 then the equivalent tax yield is .
06/ (1-.28)= .0833
If a bond 990 and in .28 TB than its
4. The point of the convents is to give the lender some leverage over the buyer, stipulating that
if the buyer were to not fulfill these covenants or obligations then the lender could call-back
the bond. In this situation, the covenants are placed to show