A hоrse "switches intо" аnаerоbic work аt heart rates generally over _________ bpm.
Gаvin plаns tо аttend an MBA prоgram оne year from now to prepare for a career change. The tuitions are expected to be $40000, $42000, $44100, paid at one year from now, two years from now, and three years from now, respectively. The yearly spot rates sequence is: 0.01, 0.016, 0.036, 0.05, 0.052, 0.06 for the next 6 years. Suppose the spot rates are inferred from the corresponding six zero-coupon bonds with maturity spanning from 1 year to 6 years which are traded in the markets assuming continuous-compounding. 1. (5 points) What is the market price of a 2-year maturity zero coupon bond? 2. (6 points) If a 4-year coupon bond with coupon rate of 4% and face value of $100 traded in the market for $105, is there any arbitrage opportunity? If no, why? If yes, how would Gavin capture this arbitrage opportunity? Coupons are paid annually at the end of each year. 3. (6 points) Assuming all 6 zero-coupon bonds can be freely traded now and in the future. The spot rates will remain at their current levels. What is the best bond portfolio formed by these zero-coupon bonds to hold by Gavin to fully cover his tuition liability for the MBA program? 4. (8 points) Given the current low interest rate environment, there is a high likelihood that the spot rates could rise by 0.5% across all maturities simultaneously. What is the best bond portfolio to hold accounting for this likely interest rate hike scenario?