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  3. (a) starting from today, every month you save $200

(a) Starting from today, every month you save $200 into a bank account which earns interest...

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Finance

(a) Starting from today, every month you save $200 into a bankaccount which earns interest at annual rate of 3.8%.

How much money do you have in the account at the end of 8years?

(b) What is the modified duration ofan 6% bond with 11 years to maturity that is trading at a yield of6%?

Assume that coupon is paidsemi-annually.

(c) Suppose that the 6-month US Treasury bill rate is equal to5.98%, and the forward rate on a 6-month Treasury bill 6 monthsfrom now is 7.88%. (Both are in yearly terms).

What is the 1-year bill rate?

Answer & Explanation Solved by verified expert
3.6 Ratings (277 Votes)
a Interest will be calculated using below formulaI P r twhere p principle amount 200 12 2400r 38 given that bank will pay interest annuallyt time period 1 yearyear 1 interest will be received for 8 years20012 38100 1 912 8 years 729 for all 8 years for year 2s saving    See Answer
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