Liquidity affect the nominal interest rate

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Questions

1. How would an increase in liquidity affect the nominal interest rate? How would an increase in liquidity affect the nominal interest rate?

2. A 3 1/8 percent TIPS has an original reference CPI of 180.5. If the current CPI is 206.8, what is the current semiannual interest payment and par value of the TIPS?

3. A broker quotes a price of $930.35 for a three-year, 11% annual coupon bond. What is the yield to maturity?

4. Assume an investor has a tax rate of 33 percent. What municipal bond rate is equivalent to a corporate rate of 7.8 percent for this investor?

5. A preferred stock pays an annual dividend of $6.20 a share. What is the maximum price you should pay today to purchase this stock if you require a rate of return of 14.25 percent?

6. A company paid a 0.632 dividend per share in 2018, which grew to .76 in 2021. This growth rate is expected to continue What is the value of the stock at the beginning of 2022 if the required return is 8.7 percent?

7. A bond offers a coupon rate of 4.6 percent and currently sells at 99.2 percent of par value. What is the current yield on the bond?

Reference no: EM133239429

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