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MLK Bank has an asset portfolio that consists of $50 million of 30-year, 5-percent-coupon, $1,000 bonds with annual coupon payments that sell at par.
1. What will be the bonds’ new prices if market yields change immediately by ± 0.10 percent?
2. What will be the new prices if market yields change immediately by ± 2.00 percent?
3. The duration of these bonds is 16.1411 years. What are the predicted bond prices in each of the four cases using the duration rule?
4. What is the amount of error between the duration prediction and the actual market values?
Suppose you are committed to owning a $160,000 Ferrari. If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today? What is the pr..
Williamson, Inc., has a debt–equity ratio of 2.5. The firm’s weighted average cost of capital is 10 percent, and its pretax cost of debt is 6 percent. Williamson is subject to a corporate tax rate of 35 percent.
Value a Constant Growth Stock Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 8 percent. Safeco’s recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percent?
Fred has just sold short 3 contracts of May wheat on the CBT. These are 5,000 bushel contracts. The initial deposit is $1,500 per contract with a maintenance margin of $1,200. What is Fred's total initial margin? How much of an increase in the price ..
You are hired by the health care provider Parma Group. Your boss says, identify the most profitable price point for a new drug. The facts utilized for proper analysis are as follows: 2 million people are using the drug, a survey says for every yearly..
Develop the Executive Summary and Section 5, 'Summary, Recommendations and Conclusion', which includes your formal recommendation to the company.
(Ignore income taxes in this problem.) Assume you can invest money at a 14% rate of return. How much money must be invested now in order to be able to withdraw $5,000 from this investment at the end of each year for 8 years, the first withdrawal occu..
Research a company that has implemented a balanced scorecard system for evaluating performance. Suggest at least two (2) variance measures the identified company can employ in a balanced scorecard performance evaluation system, and examine how the co..
Assume the option will not be exercised until maturity, if at all. - Complete the following table for a speculator who purchases the put option.
One way to structure a student loan repayment plan is to make it income-contingent-that is, to relate the amount that a student would have to repay in any given month to how much income he or she earns.
airbus sold an a400 aircraft to delta airlines a u.s. company and billed 30 million payable in six months. airbus is
An investor buys put share for stock and $40. Under what circumstances does the investor make a profit? Under what tances will the option be exercised? diagram showing the variation of the investors profit with the stock price at the maturity of the ..
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