Reference no: EM132929389
Question -
(1) Your client needs to have R15,600,000 in real rands in an account when she retires in 46 years. The nominal return on any investment is assumed at 8% and the inflation rate is assumed at 3.5%. What is the real amount she must deposit each year to achieve her goal.
(2) The zero-coupon bonds of Wolf Wallstreet traders have a market price of R319,240, a face value of R1,000,000 and a yield to maturity of 9.17%. How many years would it be until these bonds mature?
(3) Skynet Computers has 5.25% coupon bonds outstanding with a current market price of R546,190. The yield to maturity is 16.28% and the face value is R1,000,000. Interest is paid semi-annually. How many years is it until these bonds mature?
(4) An investment will give you R2,500,000 a year in real terms for the next 3 years. Each payment will be received at the end of the year with the first payment occurring one year from today. Assuming you require a 6.3% return on this investment and the inflation rate is 4.5%. How much would you pay for this investment today?
(5) Inkwell Inc. bonds have a face value of R1,000,000 and are currently quoted at 98.4. The bonds have a 5% coupon rate. What is the current yield on these bonds?
(6) A South African Treasury bond is quoted at a price of R1,014.375 with a current yield of 7.236%. What is it's coupon rate?
(7) Bond Traders Inc. has a bond issue outstanding that pays an 8.5% coupon and matures in 18.5 years. The bonds have a par value of R1,000,000 and a market price of R964,200. Interest is paid semi-annually. What is the yield to maturity?
(8) A 16-year, 4.5 percent coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent?
(9) Heavy Metals Inc. wants to issue new 18-year bonds for expansion projects. The company currently has 11% bonds on the market that sell for R1,459,510, make semi-annual payments, and mature in 18 years. What should the coupon rate be on the new bonds if the firm wants to sell them at par?