Rsm 230 Assignment 1

perplexity 1 i) 91 Day Treasury short letter it is a government issued debt obligation that matures in 91 days. It is sold at a discount and the emptor is paid the face value at maturity. The compensate is the difference between the discounted price and the face value. ii) 90 Day mercantile Paper it is a promissory note issued by a confederation that matures in 90 days. In case the issuing company inattentions, the buyer has no recourse. Similarly to a treasury bill, commercial paper is excessively sold at a discount. ii) 90 Day Bankers Acceptance it is a short term corpo array paper that company sells to its bank that guarantees it and sells it again to the end user. This is used when the buyer is uncertain about the risk of default by the issuer. iv) BBB long term Corporate Bond it is a long-term debt obligation issued by a company that has been rated as having adequate energy to meet financial commitments, but more subject to adverse frugal conditions by Standard a nd Poors. Although they are priced with quoted base value of 100, they whitethorn be sold at either a discount or a premium. ) base Rate it is the base rate on which a margin is added by the lending bank to calculate ones financing charge. vi) LIBOR LIBOR stands for London Interbank Offer Rate. It is the rate that is charged when banks borrow loans in the short-term interbank market. Question 2 (a) 3 calendar month Treasury burden Rate (%) 3 month Bankers Acceptance Rate (%) 3 month Prime Corporate Paper Rate (%) Bank Rate (%) Prime Rate (%) Government of Canada Marketable Bonds, over 10 years (%) declination 31, 2007 3. 2 4. 71 4. 81 4. 50 6 4. 10 declination 31, 2008 0. 83 1. 41 2. 22 1. 75 3. 50 3. 45 celestial latitude 31, 2009 0. 19 0. 33 0. 37 0. 50 2. 25 4. 09 June 30, 2010 0. 50 0. 77 0. 73 0. 75 2. 50 3. 59 (b) Bankers Acceptance and Treasury Bills lot (in BPs) Prime Corporate Paper and Treasury Bills airing (in BPs) Govt. Of Canada marketable bonds and 3 month Tr easury Bills (in BPs) declination 31, 2007 89 99 28 December 31, 2008 58 139 262December 31, 2009 14 18 390 June 30, 2010 27 23 309 (c) fff Question 3 (a) US Treasury Bill Rate (%) LIBOR Rate (%) break between LIBOR Rate & 3 month US Treasury Bill rate (in BPs) US Commercial Paper 3 month rate (%) Long Term US Treasury Bond feed (%) circularize between US Long Term AA Corporate Bond consequence & Long Term US Treasury Bond yield (in BPs) Spread between US Long Term BBB Corporate Bond yield & Lond Term US Treasury Bond yield (in BPs) December 31, 2007 3. 7 4. 07 90. 75 5. 08 4. 03 140 204 December 31, 2008 0. 13 1. 43 130 1. 30 2. 22 460 634 December 31, 2009 0. 05 0. 25 20. 06 1. 35 3. 39 162 332 June 30, 2010 0. 18 0. 53 35. 89 1. 35 2. 93 134 299 (b) Fffff (c) Fffff Question 4 (a)