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Assume interest rates for bonds today is 5% for an AAA rated bond.Calculate the price of the bond you have selected relative to the5%. Is the bond selling at a premium or a discount? Why? Be sure toshow how you arrived at your answer. What other factors mayinfluence the value of a bond?
Using the option prices given below, give an example of a zero cost collar and describe how it could be used to hedge a long position in the underlying asset.
In 2010, Grace loaned her friend Paula $12,000 to invest in various stocks. Paula signed a note to repay the principal with interest.
The next dividend payment by Mosby, Inc., will be $2.90 per share. The dividends are anticipated to maintain a 7.75 percent growth rate, forever. Assume the stock currently sells for $49.40 per share.
There are 25 years to maturity. Compute the price of the bonds based on semiannual analysis. With 20 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds?
Given the following information for Huntington Power Co., find the WACC. Suppose the firm's tax rate is 35 percent.
Bohen Inc is expexted to pay $1.50 per share dividend of the year is $1.50. The dividend is expected to grow at constant rate of 7 percent. The required rate of return on the stock r is 15 percent.
Assuming the spot rate equals $1.298 three months from today, would entering into the forward contract have been a good idea in this case? Explain your answer.
You deposit $8,000 into a retirement account at the end of the next 12 years earning 10% interest, what is the future value of your retirement after 12 years?
If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Dave be then?
Difference Equation example: a financial system
Neon Company's stock returns have a covariance with market portfolio of 0.031. The standard deviation of the returns on the market portfolio is 0.16, and expected market risk premium is 8.5%.
The "Inflation-Plus" CD is the safer investment because it guarantees the purchasing power of the investment
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