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You purchase a bond with an invoice price of $1,075. The bond has a coupon rate of 9.5 percent, semiannual coupons, a $1,000 par value, and there are two months to the next coupon date.
What is the clean price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Clean price
Find the present value of $600 due in five years under each of the following conditions:
You have won a lottery which will pay you 10 annual checks of $3 million each. Your checks will begin arriving starting a year from now. Calculate the present value annuity in millions of dollars of these cash flows assuming a discount rate of 5%.
What is an inflation risk premium? What effect does the inflation risk premium have on the yield curve?
You are planning your retirement in 10 years. You currently have $174,000 in a bond account and $614,000 in a stock account. You plan to add $6,600 per year at the end of each of the next 10 years to your bond account. The stock account will earn a r..
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Indicating that students can choose their percent of deductible.
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An endowment own $150M of bonds that has a modified duration (MD) of 8.5. Over the next 6 months they want to decrease the MD to 6.0. They can use Treasury futures contracts that mature in 6 months that have a current nominal value of $0.25M and have..
At the beginning of year 4, Lee deposits an additional $40,700 at 12% interest compounded semiannually.
Use the IRR rule to determine whether you should take this project. Confirm your recommendation using the NPV rule.
What is the approximate percentage change in the bond price if its yield changes to 7.09%?
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