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1. Calculate the Macaulay duration of a 4 year, 10% par-value bond with semi-annual coupons, sold to yield 3%. Also calculate the Macaulay convexity of the bond Round your answers to five decimal places.
2. Briefly explain in no more than five sentences, your observations on the trend charts of Amazon’s and eBay’s Revenues, Operating Income and Net Income. How are the two companies’ trends on these Revenues, Operating and Net Income similar? How are they different?
3. Kelly Corporation has a weighted average cost of capital of 10.0 percent. The company’s cost of equity is 14 percent, and its pretax cost of debt is 8.0 percent. The tax rate is 38 percent. What is the company's debt-equity ratio?
An investor purchases a stock for $56 and a put option for $.80 with a strike price of $50. The investor also sells a call option for $.80 with a strike price of $66. What is the maximum profit and loss for this position?
Rust Pipe Co. was established in 1994. Four years later, the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to eleven votes p..
In September of 1984, Apple’s stock was trading at $3.36. In September of 2012 it was trading at $700.26. What is the return for an investor who bought the stock in 1984? In February of 2008, AIG’s stock was trading at $937.20. In February 2009, the ..
A company is expected to pay a dividend of $1.15 per share one year from now and $1.89 in two years. You estimate the risk-free rate to be 3.4% per year and the expected market risk premium to be 5.9% per year. After year 2, you expect the dividend t..
The yield on a three-month T-bill is 3.1%, and the yield on a 10-year T-bond is 4.2%. The market risk premium is 5.7%. D'Amico Co. has a beta of 1.56. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is_____?
The price of a 10-year $100 par zero coupon inflation-indexed bond is $88.91. A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%. Compute the annual rate on the real bond.
To do this, you take out a $175000 30-year,12 percent mortgage. How large will your annual payments be?
Which of the following duties is performed by the clearinghouse? holding margin deposits negotiating prices between buyers and sellers setting prices for securities lending money to meet margin requirements none of the above
If two bonds have the same duration, the change in their price when interest rates change will be the same. For non-callable bonds, duration provides only a linear approximation of a bond's price changes as interest rates change
Panelli's is analyzing a project with an initial cost of $110,000 and cash inflows of $65,000 in year one and $74,000 in year two. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. What is..
Calvani, Inc., has a cash cycle of 46.5 days, an operating cycle of 69 days, and an inventory period of 30 days. The company reported cost of goods sold in the amount of $348,000, and credit sales were $571,000. What is the company’s average balance ..
You short sold 1,200 shares of stock at a price of $25 and an initial margin of 70 percent. If the maintenance margin is 30 percent, at what share price will you receive a margin call? What is your account equity at this stock price?
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