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The 6-month, 12-month, 18-month, and 24-month zero rates are 3.00%, 3.50%, 4.00%, and 4.50% with semi-annual compounding.Q1: What are the rates with continuous compounding?Q2: What is the forward rate for the six-month period beginning in 12 months (i.e., F12,18)?Q3: What is the value of an FRA that promises to pay you 5.50% (compounded semi-annually)on a principal of $1 million for the six-month period starting in 12 months? Hints: you must convert your continuous rate calculated in Q2 to semi-annual to determine the current forward rate for the FRA; you must remember that the contract covers only 6 months (one-half year) ofinterest.
What is the present value of the following annuities?
Assets and costs are proportional to sales. Debt and equity are not. A dividend of $963.60 was paid, and Martin wishes to maintain a constant payout ratio
How can the free cash flow approach to valuing the company be employed to solve the valuation challenge present by firms that do not pay dividends?
In the early 1980's, the prime interest rate hit a high of 21%. In 1995 the prime rate was considerably lower. That sharp interest rate decline has increased the company concerns about the efficiency of their cash management system.
In February 2009 Treasury 6s of 2026 offered a semiannually compounded yield of 3.5965%. Recognizing that coupons are paid semiannually, calculate the bond's price.
Discuss and explain the effect of required reserves and capital levels on a bank's profitability.
What will happen to the opportunity cost of capital if investors suddenly become especially conservative and less willing to bear investment risk?
Compute of cost of capital and Calculate the cost of capital for the funds needed to meet the expansion goal and The firm expects to generate enough internal equity to meet the equity portion of its expansion needs.
Fern has preferred stock selling for 95 percent of par that pays an 8 percent annual coupon. What would be Fern's component cost of preferred stock?
Assume there is a 12- year, 9.5% semiannual coupon bond, with a par value of $1000. The bond sellsy for $1,152. A. What is the bond's yield to maturity. B. What is the bond's current yield?
Suppose your employer, hates the company's current telephone system. By investing $60,000 in a new phone system, he thinks that he can improve revenue through fewer misdirected sales inquiry calls,
What is the maximum dividend payout ratio consistent with not requiring external funds for a firm with an ROE of 15% a debt-equity ratio of 25% and annual sales growth objective of 10%? (show work)
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