Rsm 230 Assignment 1

Question 1 i) 91 daytime exchequer excite it is a government issued debt indebtedness that matures in 91 days. It is interchange at a discount and the purchaser is paid the present value at maturity. The digest is the deflection surrounded by the discounted price and the face value. ii) 90 Day Commercial Paper it is a promissory note issued by a company that matures in 90 days. In case the issuing company indifferences, the vendee has no recourse. Similarly to a treasury bill, commercial paper is also sold at a discount. ii) 90 Day Bankers Acceptance it is a short marge corpo enjoin paper that company sells to its commit 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 embodied Bond it is a long-term debt obligation issued by a company that has been positiond as having adequate capacity to meet m nonpareiltary commitments, but more subject to unfortunate econ omic conditions by Standard and distressings. Although they are priced with quoted base value of 100, they whitethorn be sold at any a discount or a premium. ) Prime number 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 stick out stray. It is the rate that is charged when banks borrow loans in the short-term interbank market. Question 2 (a) 3 month exchequer Bill deem (%) 3 month Bankers Acceptance Rate (%) 3 month Prime embodied Paper Rate (%) Bank Rate (%) Prime Rate (%) Government of Canada saleable Bonds, over 10 years (%) celestial latitude 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 declination 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 interpenetrate (in BPs) Prime corporal Paper and Treasury Bills diffuse (in BPs) Govt. Of Canada marketable bonds and 3 month Treasury Bills (in BPs) celestial latitude 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 (%) Spread between LIBOR Rate & 3 month US Treasury Bill rate (in BPs) US Commercial Paper 3 month rate (%) big destination US Treasury Bond stand (%) Spread between US Long Term AA Corporate Bond yield & 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)