Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Consider a pension plan that will pay $10,000 once a year for a 5-year period (5 annual payments). The first payment will come in exactly 5 years (at the end of year 5) and the last payment in 9 years (at the end of year 9).
What is the duration of the pension obligation? The current interest rate is 10% per year for all maturities.
To generate the scheduled pension payments, the pension fund wants to invest the present value of the future payouts in bonds and match the duration of its obligation in part a). If the fund uses 5-year and 10-year zero-coupon bonds to construct its investment position, how much money (dollar amount) ought to be placed in each bond now? What should be the total face value (not current market value) of each zero-coupon bond held?
Right after the fund made its investment outlined in part b), market interest rates for all maturities dropped from 10% p.a.to 9% p.a. Show that the investment position constructed in part b) can still fund (approximately) the future payments by showing that the fund’s net investment is close to 0 at the end of year 9 after making all the scheduled payments. Assume that interest rates will remain at 9% p.a. Any excess cash from the 5-year investment will be reinvested at 9% and any fraction of the 10-year bonds held can be sold at the going market price at any time to fund the annual payments.
Describe how you can take advantage of this situation, by finding a combination of purchases.
You are saving for your retirement. You have decided that starting today you will deposit 5 percent of your annual salary in an account which will earn 10 percent per year. Your salary today is $70,000, and it is expected to increase at 4 percent per..
What is the difference in interest cost if he had obtained a mortgage rate of 5.5%?
Assume that you are setting up your retirement plan by considering two investment plans together. (Your retirement in 20 years). You want to earn a total of $1,000,000 after 20 years from the following two investment plans together.
Draw a timeline, depicting the anticipated dividend cash flows for this stock.
Beta values are highly dependent on the. Which one of these statements related to beta is correct?
The complete portfolio refers to the investment in ________. The market risk premium is defined as ________.
Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million
You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.0 percent coupon bonds are selling at a price of $653.03. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answ..
The Olsen Mining Company has been very successful in the last five years. Its $1,000 par value convertible bonds have a conversion ratio of 32. The bonds have a quoted interest rate of 9 percent a year. What is the current price of the bond? What is ..
How much should he invest in each bank to earn the most interest? What is the maximum amount of interest that Jamaal can earn?
Will his savings be enough to buy the house of his dreams in 15 years?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd