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Portfolio A consist of a one-year zero-coupon bond with a face value of $2000 and a 10-year zero-coupon with a face value of $6,000. Portfolio B consist of a 5.95-year zero-coupon bond with a face value of $5000. The current yield on all bonds is 10% per annum (continuously compounded). a. Show that both portfolios have the same duration b. Show that the percentage changes in the values of the two portfolios for a 0.1% per annum increase in yields are the same c. What are the percentage changes in the values of the two portfolios for a 5% per annum increase in yields? What are the convexities of the portfolios above? To what extent does (a) duration and (b) convexity explain the difference between the percentage changes calculated in part (c) of the above?
Assume that the firm could earn 10% on marketable securities and that there are 260 working days and hence 260 transfer from each lockbox location per year.
Not long ago, vanessa woods sold her company for several million dollars (after taxes). She took some of that money and put it into the stock market. Today, vanessa's portfolio of bluechip stocks is worth 3.8 million. Why would she choose to hedge..
Kings of Leon, Inc., has a book value of equity of $64,500. Long-term debt is $57,500. Net working capital, other than cash, is $22,300. Fixed assets are $92,100 and current liabilities are $7,300.
depreciation on the equipment to produce the new board will be $1,370,000 per year, and fixed costs are $1,270,000 per year. Required: If the tax rate is 35 percent, what is the annual OCF for the project?
You will begin payments one year from today. You will make your last deposit when your oldest child enters college. Also assume that each child will take 4 years to graduate from college.
Your firm, Martin Industries, has experienced a higher than expected demand for its product line. The firm plans to expand its operation by 25% by spending $5,000,000 for an additional building.
Fama's Llamas has a WACC of 10.30 percent. The company's cost of equity is 13.2 percent, and its cost of debt is 8.9 percent. The tax rate is 40 percent.
The firms marginal tax rate is 40%. What will the cash flows for this project be during year 3?
Does anybody have the financial statements to the Governmental Accounting Practice Set- Province of Europa?
You purchased an item costing $5,700 on July 13. The terms of sale were 1/5, net 20. What is the last day you can pay the discounted price?
Describe why strengthening basis benefits a short hedge and hurts a long hedge.
Write down the two methods for estimating debit cost of capital, and what do you do when there's default risk?
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