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Suppose an investor with a12-year investment horizon is considering the purchase of a 4.5% APR, monthly payment mortgage with 23years (276months) remaining until maturity. The mortgage currently has an outstanding balance of $220,000 and is selling to offer a YTM of 4.8% on the secondary market. The potential investor believes she will be able to reinvestment the first sixty(five years worth of) interim cashflows at a rate of 4.2% (per year) over their entire investable life. Due to expected increases in market wide interest rates, she expects to be able to investment final eighty-four(seven years worth of) cashflows at a rate of 4.8% (per year)over their entire investable life. At the end of her investment horizon, she expects to be able to sell the mortgage at a YTM of 4.8%. What is the total/expected (effective) return offered by this security?
A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?
In 2000, Jack and his two adult sons, Jim and Joe, created a corporation, Jack & Sons, Inc, with each as a shareholder and director.
Last month, corporations supplied $250 billion in one-year discount bonds to investors at an average market rate of 11.8%. This month, an additional $25 billion in one-year discount bonds became available, and market rates increased to 12.2%. Assumin..
the variables were people who visit starbucks to make a purchase for coffee daily and weekly.the other variable was the
A tenant offers to sign a lease paying a rent of $2,500 per month for 10 years (120 months). At 0.75% of monthly interest rate, what is the present value of this lease?
Norma's Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days.
This year, FCF Inc. has earnings before interest and taxes of $9.1 million, depreciation expenses of $0.6 million, capital expenditures of $1.5million, and has increased its net working capital by $575,000. If its tax rate is 30% , what is its fre..
You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.3million. Investment A will generate $1.89million per year (starting at the end of the first year) in perpetuity. Investment ..
What are the reasons for rising health care expenditures? What are various groups doing to curb the high costs of health care?
Sharam Industries has a 120-day operating cycle. If its average age of inventory is 50 days, how long is its average collection period? If its average payment period is 30 days, what is its cash conversion cycle? Place all of this information on a ti..
In what ways could Islamic finance be considered an alternative to conventional finance? Discuss why or why not Islamic finance is a viable alternative to conventional finance.
Venture Capital is an alternative for financing new and often high-risk ventures. Briefly discuss minimum of 3 key considerations of choosing a venture capitali
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