Investing your money in bank savings account

Assignment Help Financial Management

Reference no: EM131871283

1. Both Bond Short and Bond Long have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Short has 3 years to maturity, whereas Bond Long has 13 years to maturity. If interest rates suddenly rises by 2 percent, which of the following statements is most correct?

A) The prices of both bonds decline, while Bond Short declines more than Long.

B) The prices of both bonds decline, while Bond Long declines more than Short.

C) Bond Short’s price would increase, while Bond Long’s would decline.

D) Bond Short’s price would decline, while Bond Long’s would increase.

2. You are interested in investing your money in a bank savings account. Which of the following banks would you bank with?

Bank A; 8 percent APR with monthly compounding.

Bank D; 8 percent APR with daily compounding.

Bank B; 8 percent EAR.

Bank C; 8 percent APR with quarterly compounding.

Reference no: EM131871283

Questions Cloud

Split into the beginning and ending payment periods : Assume that you are now 25 years old. You would like to retire at age 65. Why does this problem have to be split into the beginning and ending payment periods?

Calculate the apr and r ear assuming the loan : Calculate the APR and r EAR assuming the loan is a simple interest loan

Require effective annual interest rate : If you require an "effective" annual interest rate (not a nominal rate) of 10.78%, how much should you be willing to pay for the bond?

What is degree of financial leverage : Compute the EPS that DSF expects to generate this year. What is DSF’s degree of financial leverage (DFL)? The firm has no preferred stock.

Investing your money in bank savings account : You are interested in investing your money in a bank savings account. Which of the following banks would you bank with?

About the price and yield : A 7% semiannual coupon bond matures in 4 years. What is the bond's price? What is the bond's YTM?

The internal rate of return for the cash flows : Compute the internal rate of return for the cash flows of the following two projects.

About the operating cycle : Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase,

What is nominal yield to maturity : What is their nominal yield to maturity? What return should investors expect to earn on these bonds?

User Account

All Pages