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1. A government bond is currently selling for 1,195 and pays 75.00 per year in interest for 14 years when it matures. If the redemption value of this bond is 1,000 dollars, what is its yield to maturity if purchased today at 1,195?
2. Suppose the government bond above in problem one is held for five years and a savings institution acquired a bond and deciedes to sell it at 940.00. What is the average annual yield the savings instiution will have earned for its five year investment in the bond?
3. US treasury bills hold (100.00 par value) a. 97.25, 182 days b. 95.75, 270 days. c. 98.75, 91 days Calculate the bank discount rate on each bill if it is held to maturity. What is the equivalent yield to maturity on each of these treasury bills?
Examine the duration and convexity of three bond issuances. Determine how sensitive the bond valuations are to changes in interest rates. Value the bonds if interest rates rise, fall, or remain unchanged.
What is the after-tax cost of debt for capital budgeting purposes? What is the cost of equity for capital budgeting purposes?
Strong form market efficiency: A. accurately reflects all information, both public and private B. only accurately reflects private information C. reflects only public information D. implies weak form market inefficiency E. implies semi-strong form ma..
Six-month T-bills have a nominal rate of 5%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3%. In the spot exchange market, 1 yen equals $0.01. If interest rate parity holds, what is the 6-month forward exchange rat..
Constant growth Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $1.75 yesterday. Bahnsen's dividend is expected to grow at 6% per year for the next 3 years. what is the present value of this expected f..
Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in Equation 5.17 is A = 4, what would be a reasonable guess for the expected market risk premium? What will happen t..
Think of something you want or need for which you currently do not have the funds. It could be a vehicle, boat, horse, jewelry, property, vacation, college fund, retirement money, etc. Select something which costs somewhere between $2,000 and $50,000..
What is the beta of your portfolio? what is the required return of the portfolio?
Why are derivatives important to the financial community? Does the government regulate the market? How can there be such a meltdown?
Discuss what the drawbacks are of free trade – provide specific examples supported by researchable data,
Suppose the quote on pounds is $1.624-1.631 (bid-ask). If you converted $10,000 to pounds and then back to dollars, how many dollars would you end up with?
Stock in Country Road Industries has a beta of 0.68. The market risk premium is 8 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.9 per share, and dividends are expected to grow at a 4 percent annual..
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