Reference no: EM131434848
Mini case
Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company's pension fund management division. An important new client, the North-Western Municipal Alliance, has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities, and Strother and Tibbs, who will make the actual presentation, have asked you to help them by answering the following questions.
a. What are the key features of a bond?
b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky?
c. How does one determine the value of any asset whose value is based on expected future cash flows?
d. How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%?
e. (1) What would be the value of the bond described in part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
(2) What would happen to the bond's value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond?
(3) What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT,I/YR,FV,andN, and then change N to see what happens to the PV as the bond approaches maturity.)
f. (1) What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relation ship between rd and the bond's coupon rate?
(2) What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)
Find the solution in a vector form of the given system
: Find the solution in a vector form of the given system. Find the particular solution of the homogeneous differential equation with the given initial condition.
|
Discuss about your ethical considerations analysis
: First provide a key outline of the work below. This is due on 16 Mar include any notes that you feel are appropriate. The purpose of this assignment is to help improve the quality of the IP5.During the past few weeks, you have considered the vario..
|
What is the fund required rate of return
: If the market's required rate of return is 11% and the risk-free rate is 7%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
|
Case for witness modelling and process improvement
: MOD002610 Modelling & Simulation for Operations Management Assignment case study for Witness modelling and process improvement. The bar arrives based on vendor's supply schedule in lots of 3, every 30 minutes. The bar stock buffer can hold only 10 b..
|
What are the key features of a bond
: a. What are the key features of a bond? b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? c. How does one determine the value of any asset whose value is based on expected future cash flows?
|
Examine issue and discuss their strengths and weaknesses
: Examine issue and discuss their strengths and weaknesses. State if you support the view that Lck becomes activated upon TCR stimulation and justify your conclusion.
|
Presidents of mutual of seattle insurance company
: Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company's pension fund management division. An important new client, the North-Western Municipal Alliance, has requested that Mut..
|
Discuss about the information governance in health care
: Information Governance has become a focus of health informatics. A co-theme related to information governance is Data Stewardship. For this assignment, you will create a concept map to illustrate the relationships and differences between these ..
|
What way will the supplier relationships change or improve
: ASCM 632 Homework. Given the system that is chosen, in what way will the supplier relationships change or improve? How should they now work with their suppliers
|