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Consider the following risk-free T-bill and coupon bonds available for sale in the bond market (annual coupons):
Maturity Price Coupon
1 942 T-bill
2 995 6.3%
3 998 7.5%
4 985.25 6.75%
a) Your company plans to issue four-year maturity bonds. You plan to issue bonds priced at $980. At what level should you plan to set the coupon on your bond?
b) Suppose now that your company does not have money to pay coupons, and thus plans rather to issue discount bonds instead of coupon bonds. At what price do you expect to sell the zero-coupon bonds?
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Can the risk-free asset be a universally risk-free to all investors?
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calculate the percentage price changes of the two bonds.
An investor is considering purchasing one of the following three stocks. Stock X has a market capitalization of $ 9 billion, pays a relatively high dividend with little increase in earnings, and has a P/E ratio of 11. Classify these stocks according ..
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Find the arbitrage profit (in terms of Canadian dollars) per television according to absolute PPP.
if the face value of a bond is $1000, the bond's term is 10 years, you paid $950 for the bond and the coupon rate is 4 percent, then the coupon payment is? If the price of a financial asset is $100 at the beginning of the period, pays a $5 dividend, ..
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