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A 5 year bond pays interest. The par value is $1000, and the coupon rate equals 7%. If the markets required return on the bond is 8%, then what is the bond's market price?
A bond that matures in two years makes semiannual interest payments. The par value is $1000, the coupon rate equals 4%, and the bond's market price is $1019.27. What is the bond's yield to maturity?
What was the average real risk-free rate over this time period? Average real risk-free rate % What was the average real risk premium?
A retirement home in Florida costs $200,000 today. Housing prices in Florida are increasing at a rate of 4% per year. Joe wants to buy the home in 8 years when he retires. Joe has $25,000 right now in a savings account paying 8% interest per year. Jo..
Ingenta Bank has securitized a pool of 500 interest only mortgages with and average principal of 450,000 each and 30 years to maturity. The mortgage pool pays an aggregate coupon of 3.42%. Ingenta bank sells the pool to an SPV who collects an annual ..
Oriental is expected to pay an annual dividend of $2 per share forever. Investors require a return of 12% per year to compensate for the risk of not receiving the expected dividends. The firm’s share trade for $19 each. What is the value added by buy..
How does the put–call parity formula for a currency futures option differ from the put–call parity formula for an option on a currency?
Bond X is a 5 percent coupon bond. Bond Y is a 10 percent coupon bond. Both bonds have 8 years to maturity, make semiannual payments, and have a yield to maturity of 10 percent. If the interest rate suddenly falls by 1 percent, what is the percentage..
Mideque, Inc., is considering a project to produce pens. It is estimated that the initial cost of the equipment, including transportation, installation, and so forth, will be $24,000. Mideque also estimates that the revenues (sales) each year over th..
A business borrows $296,926 for 9 years at an annual rate of interest of 6%. If payments are annual and the loan will negatively amortize by $49,469, what will be the annual payment required? What is the present value of a perpetuity making quarterly..
Due to a recession, expected inflation this year is only 3.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3.25%. Assume that expectations theory holds and the real risk-free rate is r* = 2.75%..
Stock repurchase The following financial data on the Bond Recording Company are available: Calculate the EPS after the repurchase. Explain your calculations. If the stock still sells at 10 times earnings, what will the market price be after the repur..
Dalia’s Biomedical Supplies has a stock with a beta of 0.85 and an expected return of 10%. Assume that short-term US treasury bills are currently earning 3% and the market risk premium is 5%. assuming an equal investment in the two assets, what is th..
You are considering two machines. A and B that can be used for the same purpose. Machine A costs 250,000, will reduce costs by 75,000 per year needs working capital of 20,000 at time zero which will be release at the end of the project has a 5 year s..
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