Analyze Recent Developments in the Euro Era - Financial Analysis Assignment Help

Assignment Task

QUESTION 1

(THE INTEREST RATES)

You are a senior financial analyst and have been asked to analyse recent developments in the Euro era and the U.S markets and advise the top management on the economic conditions in both markets. You have collected data on the euro area yields of the central government bonds and the U.S. treasury bond yields. For this purpose, you have downloaded the following data from the European Central Bank and the U.S Federal Reserve Bank on 23rd April 2021 (Mo = month, Yr = Year):
23/04/2021    
        
    Euro area Central    U.S. Treasury
Time to Maturity    Government Bond Yield    Bond Yield
    Rates    Rates
1 Mo    -    0.08%
3 Mo    -0.50%    0.10%
6 Mo    -0.62%    0.11%
1 Yr    -0.65%    0.12%
2 Yr    -0.70%    0.14%
3 Yr    -0.74%    0.20%
4 Yr    -0.74%    -
5 Yr    -0.72%    0.27%
7 Yr    -0.63%    0.46%
10 Yr    -0.51%    0.67%
20 Yr    -0.17%    1.19%
30 Yr    -0.05%    1.40%

REQUIRED:

a)    Considering both yield rates on 23rd April 2021, depict the yield curves charts and describe the implied market outlook in the Euro area and the U.S. market to the top management.

b)    Calculate the market price of each bond on 23rd April 2021 that issued by North Polar Ltd., a European company specialises in manufacturing semiconductors, using the yield curve data provided in the table above. What is the current total value of minimum application?

Corporate Bonds Fact Sheet
    
Issuer    North Polar Ltd.
    
Issuing date    23rd April 2021
Bond expiration date    25th April 2025
Face value    € 1000 per bond.
    
Minimum application    50 Bonds (€ 50,000)
    
Interest rate    Floating Interest Rate. The Interest Rate is the sum of the Market Rate plus the Margin.
Coupon rate (annual)    Central Government Bond Yield + 1.86% p.a.
    
Coupon payment    Annually (coupon payment is paid on 10th July every year)
    
Market Yield
    

c)    Provide two examples of changes in the market for loanable funds that can result in a change in the level of interest rates. Explain how and why the interest rate changes based on the loanable fund theory.

d)  Explain how changes in interest rates are likely to affect exchange rates.

This Financial Analysis Assignment has been solved by our Financial Analysis experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.