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1. When a bond's price is lognormal can the bond's yield be negative? Explain your answer.
2. What is the value of a European swap option that gives the holder the right to enter into a 3-year annual-pay swap in 4 years where a fixed rate of 5% is paid and LIBOR is received? The swap principal is $10 million. Assume that the yield curve is flat at 5% per annum with annual compounding and the volatility of the swap rate is 20%. Compare your answer with that given by DerivaGem.
Present value: Compute the present value of a $100 cash flow for the following combinations of discount rates and times r= %8 , t=10 years
How many different ways can he divide the class into four teams?- what is the probability that they get selected to be on the same team?
What is the discount yield, bond equivalent yield, and effective annual return on a $1 million Treasury bill that currently sells at 93 3/8 percent of its face value and is 70 days from maturity
Miller's has decided to add leverage to its financial operations by issuing $250,000 of debt at 8 percent interest. The debt will be used to repurchase shares of stock. You own 400 shares of Miller's stock.
Bond X is a premium bond making annual payments. The bond has a coupon rate of 9.2 percent, a YTM of 7.2 percent, and has 17 years to maturity. Bond Y is a discount bond making annual payments.
Use the DerivaGem software to value a 5-year collar that guarantees that the maximum and minimum interest rates on a LIBOR-based loan are 7% and 5%, respectively.
Budgeted Procedures $10,000 Budgeted Cost $400,000 Desired Profit $80,000 It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure.
The factory originally cost $1.25 million and is being depreciated for tax purposes over 25 years using straight-line depreciation. Calculate the operating cash flows of the project if the firm's tax bracket is 40%.
Assume there are a bunch of mortgages that are supposed to pay principal payments and interest payments of $2100 during the year are pooled together and sold as securities.
joe's company's bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1000 par value, and the cooupon interest rate is 6%. the bonds have a yield to maturity of 9%.
What is the economic rationale behind these bans? Would there be similar rationales for banning smoking in automobiles?
- what is the cost of capital?- what are wacc and mcc?- how do taxes affect the cost of capital?- what is the optimal
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