Q.1: If a government bond is expected to mature in two years and has a current price of $950, what is the bond’s YTM if it has a par value of $1,000 and a promised coupon rate of 10 percent? Suppose this bond is sold one year after purchase for a price of $970. What would this investor’s holding period yield be? [1.5 Marks]
Q2. A 20-year U.S. Treasury bond with a par value of $1,000 is currently selling for $1,025 from various securities dealers. The bond carries a 6 percent coupon rate with payments made annually. If purchased today and held to maturity, what is its expected yield to maturity? [1.5 Marks]
Q 3. How can the discipline of the marketplace be used as a guide for making liquidity management decisions? Explain.[2 Marks- 500 words minimum]
Q4.Briefly discuss the following: Liability Management Highly Rate-Sensitive Volatile:
Note: You are required to reply to at least two peer responses to this week’s discussion question. Your replies need to be substantial and constructive in nature
2- Liability Management
before making decisions about how to deploy the recent inflow of funds. It is risky to make asset decisions without proper analysis of liability considerations. Instead, you should focus on balance sheet management by balancing yield expectations with share and deposit pricing decisions
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