Table 4 1200 300 800 Bid 700 $41.00 16. Table 4 shows the limit book for IBM sto
ID: 2806576 • Letter: T
Question
Table 4 1200 300 800 Bid 700 $41.00 16. Table 4 shows the limit book for IBM stock You plice a market order to hu shares. At what price will you buy the shares (the cost basisy? buy 1400 A. $45.05 B. $45.49 C. $45.07 D. $45.00 Table 5 Da 08yBalance DepositsPrice Gain Ending Balance $100.00 90 102.20 17. Use Table 5. The investor is long 15 contracts. The initial margin is $5 and the maintenance margin is $3. What is the ending balance on Day 37 A. $165.00 B. $108.00 C. $153.00 D. $135.00 18. The one-year interest rate over the next three years is expected to be 5.00%, 7.00% 10.00%. The liquidity premium for one-to three-year bonds: 0%, 0.25%, 0.75%. What is the interest rate on the three year bond? A. 8.33% B. 7.75% C. 8.08% D. 7.67% 19, The current one year interest rate is 5.00% on a T-bill. The current two year interest is 7.00% on the T-note. What is the market predicting about the interest rate on a one year bond in year 2(one year from now) solely based on the expectations theory? A. 7.75% B. 6.00% C. 9.00% D. 12.00% Page 5 of 12Explanation / Answer
18.
Interest rate on 3 year bond = [(1 + 5%) × (1 + 7%) × (1 + 10%)] ^ (1 / 3) - 1 + 0.75%
= [(1.23585 ^ 0.33) - 1] + 0.75%
= 7.33 + 0.75%
= 8.08%
Interest rate on 3 year bond is 8.08%.
Option (C) is correct answer.
19.
one year interest rate after one year = [(1 + 7%) ^ 2] / (1 + 5%) - 1
= (1.1449 / 1.05) - 1
= 1.0903 - 1
= 9.03%
one year interest rate after one year is 9.03%.
Option (C) is correct answer.
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