Effective semiannual interest rate

Assignment Help Finance Basics
Reference no: EM132487718

Suppose that a financial security that pays $4.0 every six months for the next two years after which the payment decreases at the rate of 2% per period. This security pays $4.0 in 6, 12, 18 and 24 months after that every cash flow will be 2% less than the precious cash flows. If the effective semiannual interest rate is 4%, find the fair value of the security today.

Reference no: EM132487718

Questions Cloud

Briefly describe the competitive landscape : Briefly describe the competitive landscape of the two companies using Michael Porter's five forces analysis (SWOT). Compute ROE for three years (2014, 2015)
Who is better positioned to regulate online transactions : Who is better positioned to regulate online transactions and handle irregularities or complaints - consumer advocacy groups or the government
Expected rate of return on an average stock : Stock R has a beta of 1.4, Stock S has a beta of 0.85, the expected rate of return on an average stock is 10%, and the risk-free rate is 4%.
Critical analysis of the notebook movie : Critical analysis of The Notebook movie and the Diagnosis of the Main Characters and mental illness in relation to the movie.
Effective semiannual interest rate : If the effective semiannual interest rate is 4%, find the fair value of the security today.
Explain how you think kantianism would respond : What would the philosopher Kant, and his namesake moral theory suggest you should do - While sitting in your favorite restaurant, you overhear the owner
Pathophysiology Assignment - Electrolyte Abnormalities : Essential of Pathophysiology Assignment-Electrolyte Abnormalities. Identification of abnormality and treatment are often routine functions of care delivery team
Prepare a journal entries at year end : Journal entries at year end 2018, 2019 Using periodic inventory system, assuming inventory is recorded directly at the lower of cost and NRV
Option on the value of the company : Express your position as an option on the value of the company.

Reviews

Write a Review

Finance Basics Questions & Answers

  Find the monthly average seasonal funds requirements

Divide the firm's monthly total funds requirement (total assets) into a permanent and a seasonal component. Find the monthly average (1) permanent.

  Net decimal equivalent

The list price of a keyboard is $540. If the trade discount series offered is 15/5/10, find the net price by using the net decimal equivalent.

  How will higher inflation affect the number of vehicles

How will higher inflation affect the number of vehicles the dealership can sell? Based on the GM's inflation expectation what type of loan should the dealership arrange with its bank in order finance its inventory of automobiles?

  Compute the flotation costs

Based on the information , compute the flotation costs that Sprite would incur it is raises the needed funds by issuing equity only.

  What is important benefit of eif industry life cycle

What is the most important benefit of the E-I-F, Industry Life-Cycle, Customer Life-Cycle, and Porter 5-Factor Models? Eastern Optical is new firm in the newly emerging tunable laser industry. Early response to the industry has been encouraging and ..

  How much should the couple begin depositing annually

how much should the couple begin depositing annually at the end of each year to accumulate enough funds to pay the first year's tuition at the beginning of the 19th year? Assume that they can earn a 6% annual rate of return on their investment.

  What are the capital structure weights

ABC Corp. has 10 million shares of common stock outstanding. The common stock currently sells for $65 per share and has a beta of 0.75.

  Explain the differences in the responsibilities of the treas

Explain the differences in the responsibilities of the treasurer and the controller in a large corporation.

  Determine which plan is less costly

Boatler Used Cadillac Co. requires $810,000 in financing over the next two years. The firm can borrow the funds for two years at 7 percent interest per year.

  Describing elements of financial planning process

Write down two elements of financial planning process?( it is cash planning and profit planning) Why is cash planning as very important as profit planning?

  Calculate the discount factor that will be applied

Orlando Pixie Dust is considering an option to buy some land in Brazil 9 years into the future. The acquisitions department discounts future projects at 2%. Calculate the discount factor that will be applied to the future cash flow.

  What bid price per carton should you submit

Your tax rate is 32 percent and you require a 13 percent return on your investment. What bid price per carton should you submit?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd