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A $1,000 bond has a coupon rate of 10 percent and matures after 8 years. Interest rates are currently 7%.
a) What will the price of this bond be if the interest is paid annually?b) What will the price be if investors expect that the bond will be called with no call pennalty after two years?c) What will the price be if the investors expect that the bond will be called after two years and there will be a call penalty of one year's interest?d) Why are your answers different for questions a, b and c?
Assume that $ 750 is invested at 7%interested, compounded semiannually. Given that A=(1+r/n)^nt-Find out the amount of money in the at t=1,6,10,15 and 25 years
What is the nominal interest rate on a 7-year Treasury security? Round your answer to two decimal places.
Johnson Electronics is planning extending trade credit to some customers previously considered poor risks. Sales would increase by $100,000 if credit is extended to these new customers.
Define the Capital Asset Pricing Model, and then use the CAPM to determine if you should invest in StarPerformance or not and explain your investment decision.
Jack and diane are married and both executives at a large multinational electronics corporation. The couple holds substantial company stock and majority of their retirement funds depend on corporation stock performances.
O'Connell & Co. expects its EBIT to be $95,000 every year forever. The firm can borrow at 8 percent. O'Connell currently has no debt, and its cost of equity is 13 percent and the tax rate is 35 percent. The company borrows $133,000 and uses the pr..
What is the product, and why do you think it became scarce? What happened to the price of the product when it was scarce?
Find out the yield to maturity (to the nearest tenth of 1 percent) of an 8-year zero coupon bond ($1,000 par value) that is currently selling for $521.
What is your effective annual interest rate on the lending arrangement if you borrow $37 million immediately and repay it in one year? (Do not round intermediate calculations.
Under the assumption that you expect the yields to maturity ?on each bond to be 7% at the beginning of next year.
Ferris Incs bonds currently sell for $1,275 and have a par value of $1,000. They pay $120 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,120. What is their yield to call (YTC)?
Assume nominal rate is 14.62% and inflation rate is 5.49%. Solve for the real rate.
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