Reference no: EM131062950
A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a rate of 3.97 percent. What is the implied one year interest rate two years from now? Assume the rates are effective annual rates
You want to earn a real rate of return of 3.64 percent at a time when the inflation rate is 2.84 percent. What is the approximate nominal rate which you must earn?
A bond has a par value of $1,000 and a coupon rate of 6.5 percent. What is the dollar amount of each semiannual interest payment if you own 8 of these bonds?
Alex purchased a $1,000 par value bond one year ago at a price of $1,016. At the time of purchase, the bond had 12 years to maturity and a 5 percent, semiannual coupon. Today, the bond has a yield to maturity of 5.25 percent. What is his realized yield as of today?
A $50,000 face value STRIPS matures in 12 years and has a yield to maturity of 6.50 percent. What is the current dollar price of this security?
A Treasury bill has 40 days left to maturity. The bank discount yield on the bill is 3.75 percent. What is the effective annual rate?
A $40,000 face value bond matures in 64 days and has a bank discount yield of 4.5 percent. What is the current value of the bond?
A $50,000 face value STRIPS is quoted at 94.300. What is the dollar price?
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Calculate the expected dividend yield
: You buy a share of The Ludwig Corporation stock for $21.80. You expect it to pay dividends of $1.01, $1.16, and $1.3323 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.02 at the end of 3 years. Calculate the growth rat..
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What is the price of call option with the same strike price
: A put option is currently selling for $5.7. It has a strike price of $50 and seven months to maturity. The current stock price is $57. The risk-free rate is 4.6 percent, and the stock will pay a $2.7 dividend in two months. What is the price of a cal..
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What is current value of the bond and effective annual rate
: You want to earn a real rate of return of 3.64 percent at a time when the inflation rate is 2.84 percent. What is the approximate nominal rate which you must earn? A $40,000 face value bond matures in 64 days and has a bank discount yield of 4.5 perc..
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Five-year project has an initial fixed asset investment
: A five-year project has an initial fixed asset investment of $295,000, an initial NWC investment of $27,000, and an annual OCF of −$26,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
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Current dollar price of security-effective annual rate
: A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a rate of 3.97 percent. What is the implied one year interest rate two years from now? Assume the rates are effective annual rates. A $50,000 face value STRI..
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Exercise price of an option is fixed
: It is April and a trader buys 100 September put options with a strike price of $21. The stock price is $17.2 and the option price is $4.44. At the expiration, the stock price becomes $18.8. Calculate the option profit to the trader. When one buys an ..
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Prepare statement of retained earnings for the year
: Retained Earnings Statement Rolt Company began 2013 with a $135,000 balance in retained earnings. During the year, the following events occurred: The company earned net income of $85,000. A material error in net income from a previous period was corr..
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What is the risk premium on common stock
: Foster Company calculation risk premium on its Common stock. What is the risk premium on common stock? Current price per share of common $50.00 Expected Dividend per share next year $3.00 Constant annual dividend growth rate 9% Risk-free rate of retu..
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What is the difference between these two WACCs
: Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 5.30 %. This debt currently has a market value of $50 million. The CFO thinks the WACC should be based on mar..
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