Reference no: EM13972824
Explain the calculations in each of the three panels below, one at a time. Explain the purpose of the calculation and the procedure of the calculation, i.e., how the data inputs determine the output - the result. Bond Questions Support Sheets.xlsx (posted on Bb assignment page) has 'live' sheets so you can see how the calculations work.
|
buy at par
|
|
BOND CASH FLOWS
|
|
|
|
|
1994
|
1995
|
1996
|
1997
|
1998
|
|
Purchase Price
|
-1000
|
|
|
|
|
|
Interest
|
|
102.5
|
102.5
|
102.5
|
102.5
|
|
Sale Price
|
|
|
|
|
1000
|
|
Sum
|
-1000
|
102.5
|
102.5
|
102.5
|
1102.5
|
|
YTM
|
10.25%
|
|
|
|
|
|
|
|
|
|
|
|
|
buy at discount
|
|
BOND CASH FLOWS
|
|
|
|
|
1994
|
1995
|
1996
|
1997
|
1998
|
|
Purchase Price
|
-900
|
|
|
|
|
|
Interest
|
|
102.5
|
102.5
|
102.5
|
102.5
|
|
Sale Price
|
|
|
|
|
1000
|
|
Sum
|
-900
|
102.5
|
102.5
|
102.5
|
1102.5
|
|
YTM
|
13.66%
|
|
|
|
|
|
|
|
|
|
|
|
|
buy at premium
|
|
BOND CASH FLOWS
|
|
|
|
1994
|
1995
|
1996
|
1997
|
1998
|
|
Purchase Price
|
-1100
|
|
|
|
|
|
Interest
|
|
102.5
|
102.5
|
102.5
|
102.5
|
|
Sale Price
|
|
|
|
|
1000
|
|
Sum
|
-1100
|
102.5
|
102.5
|
102.5
|
1102.5
|
|
YTM
|
7.28%
|
|
|
|
|
#2- Explain the calculations in each of the two panels below, one at a time. As in #1, consider the inputs and output - the results. Then, explain the difference between the two panels. Use Bond Questions Support Sheets.xlsx, as for #1 above.
#3- Determine the yield to maturity on a 10-year 6% bond selling at par if the going rate (current interest rate for newly issued bonds of the same quality rating) is 6%? This is a think question; not a calculation question. Briefly explain how you reached your answer.
#4- If Treasury bonds are risk free, why is there a standard deviation around their mean rate of return? Refer to the table on page 17of this PDF. HINT: Examine the blue treasury interest rate trend in the chart on page 4.
#5- Your pension fund has a sub-portfolio of bonds. The duration of this bond portfolio is 8 years. The current market value of the bond portfolio is $1,000,000. Calculate the price change expected on the bond portfolio if interest rates rise from their current level of 5% to 7%, and discuss whether or not this is an example of interest rate risk.
#6- Explain in one sentence why the duration on a zero coupon bond is equal to its maturity.
|
What is the learning curve percentage
: 1.What is the learning-curve percentage, assuming the incremental unit-time method?A) 80%B) 85%C) 90%D) 100%
|
|
What is financial leverage
: Part 1What is financial leverage? What are the benefits and risks associated with financial leverage? Why do banks have a low ROA, relative to other industries, but a high ROE?
|
|
Evaluate efficacy of major types of health clinical outcomes
: Evaluate the efficacy of major types of health clinical outcomes one can use in economic evaluation analysis. Provide at least one example to support your response concerning clinical outcomes.
|
|
Explaining the tax treatment of london salary
: Boris knows little about taxes and seeks your advice on the taxability of the salary he earns while in London. Write Boris a memorandum explaining the tax treatment of his London salary. Assume that Boris has no other income sources and that he do..
|
|
Explain the purpose of the calculation
: Explain the calculations in each of the three panels below, one at a time. Explain the purpose of the calculation and the procedure of the calculation, i.e., how the data inputs determine the output - the result. Bond Questions Support Sheets.xlsx (p..
|
|
Find out the realized taxable income
: Determine whether the taxpayers in each of the following situations have realized taxable income:
|
|
Write a paper that discusses a recent crisis in the news
: Write a paper that discusses a recent crisis in the news and how it was handled from a PR standpoint (e.g. BP oil spill). How would you have handled the situation as a PR expert and why? What tactics and techniques would you have used and why?
|
|
The analyst used the overall beta to value
: The risk-free rate is 2% and the implied equity premium is 6 %. Your firm's overall bottom-up unlevered beta is 1.2. When examining the latest valuations for a potential investment in a new factory, however, you notice that the analyst used the overa..
|
|
Summarize the frequency, the total dollars spent
: Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. What observations can you make about Heavenly Chocolates' business based on the day of the week? Discuss.
|