logo

Money and Capital Markets - Assignment

7 Pages1257 Words120 Views
   

Deakin University

   

Money And Capital Markets (MAF202)

   

Added on  2020-03-13

About This Document

In this document, we will discuss the Australian banking system which was largely unaffected by the Global Financial Crisis (GFC). The resilience of the Australian banking industry stems from the regulatory structure that underpins the financial system.

Money and Capital Markets - Assignment

   

Deakin University

   

Money And Capital Markets (MAF202)

   Added on 2020-03-13

ShareRelated Documents
RUNNING HEAD: Money and Capital Market1Money and capital Market
Money and Capital Markets - Assignment_1
Money and Capital Market2Que 2)Litterman and Schenkman (1991) have argued in their article that yield curve is of three types and these types of yield curve make an impact over the bond return of the company. It has been argued by Gürkaynak, Sack and Wright, (2007) that with the increment in the time, the return of the bonds also get enhance and vice versa. Diebold, Rudebusch and Aruoba, 2006 has argued that the slope position of yield curve get change with the changes into the time period if the investment has been done for more time than the return would also be more and vice versa. Further, it has been argues by some researchers that level yield curve depict about the balance in risk and return of bond at the same time, the yield curve of slop orsteepness depict about the less return with the time, this slope takes place especially, at the time of breakdown of the economy or at the time of influences from another country. Further, it has also been found that the yield curve of curvature depict about the high return with the time, this slope takes place especially, at the time of enhancement of the economy or at the time of influences from another country. Option 1Option 2Face value100Face value100Terms 5Terms (Semi years)10Coupon rate8.00%Coupon rate8.00%Yield to maturity8.00%Yield to maturity8.00%interest 3.50 interest 5.00 Yield to maturity 8.00%Yield to maturity (Half yearly)4.00%Price of bond$82 Price of bond$50 Amount needed$ 15,423.00 Amount needed$ 15,423.00 Number of bonds $188.01 Number of bonds $ 308.46 Company need to pay at maturity $ 18,801.02 Company need to pay at maturity $ 30,846.00 The above calculations depict about the same bond, but it has been analyzed that with the time, the price of the bond has been lowered and the return over the bonds has been enhanced. It has also been found that if the investment would be done for 5 years than $18,801 would be get by the holder whereas if the investment would be done for 10 years than $ 30,846 will be get by the holder.
Money and Capital Markets - Assignment_2
Money and Capital Market3Thus it has been found that the statement of Litterman and Schenkman (1991) is quite true. Que 3)Yield curve:As discussed, yield curve is a line which plots interest rate upon it, at a particular time, of some bonds which have equivalent credit quality but different maturity dates. A study has been performed over Australia and Netherlands bonds to analyze the bond condition of these countries. Through analyzing the Australia’s bond yield graph, it has been found that the return of the company is enhancing rapidly with the increment in the time period, it has been found through this study that the return was 1.45 in first year and after 15 years the return has been 2.924 which depict a very high increment in the returns. This growth has taken place due to rapidly increment in the economy state of Australia. It has been found that the GDP of the company has been increased from previous years and thus the return over bonds has also been enhanced. (investing.com, 2017)Through analyzing the Netherland’s bond yield graph, it has been found that the return of the company has been almost similar in the beginning of 3 years, it has been found through this study that the return was in negative figures and after 4 years, the positive
Money and Capital Markets - Assignment_3

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Article | JPMorgan Chase and co. is the biggest bank of the United States.
|5
|521
|19

INVESTMENT MANAGEMENT Zero Coupon Bond
|5
|1059
|207

Accounting & Finance Question Answer 2022
|11
|1288
|19

Financial Calculations and Analysis
|3
|921
|234

Investment Analysis: Yield Curve, Interest Rate Risk, and Efficient Market
|7
|1522
|333

Yield Curve and Relationship Between Interest Rates and Inflation
|8
|2008
|450