Which bond is best for paul

Reference no: EM13759678

Bonds A,B and C are all zero-coupon bonds. Bond A matures in 3 years, Bond B matures in 7 years, and Bond C matures in 10 years. Paul is uncertain as to the direction of interest rates over the next several years, so he wants to lock-in his return over his 7 year time horizon. which bond is best for Paul?

A. Bond A because it matures in 3 years, and Paul can then roll-over the funds to a 4 year bond.

B. Bond B because it matches Paul's time horizon

C. Bond C because it has a longer maturity, it will probably have a higher yield

D. Since these are zero-coupon bonds, it does not matter which bond Paul chooses.

E. Bonds are too risky for Paul to be investing

Last month when IBM was selling for $86, Dan purchased a call option on IBM with an exercise price of $90 for $2 per option or $200 total. Yesterday IBM closed at $95. Based on the minimum value of the contract, if Dan sells his call at yesterday's close, what would his return be?

A. 4%

B. 6%

C. 50%

D. 150%

E. 250%

Wendy's broker has recommended she purchase 500 shares of a mutual fund that is currently priced at $25 a share. The commission on the purchase price is 3%, and the fund charges a 1% annual management fee and a $10 annual administrative charge. What is the total cost over the first year to invest in this fund?

A. $12,500

B. $12,875

C. $13,000

D. $13,010

E. $13,014

XYZ Corporation has a cumulative preferred stock that pays $1 per share per quarter. The firm did not declare a dividend the last two quarters. To be able to pay dividends to common shareholders, the preferred stock dividend this coming quarter must be

A. XYZ does not need to pay preferred stock dividends to be able to pay common stock dividends

b. $1

C. $2

D. $3

E. $4

A company has a $5 million balloon payment that is coming due. Which of the following is the best alternative to meet this payment?

A. borrow the $5 million for 10 years from the local bank at 7% interest

B. issue 30 day commercial paper at 4% interest

C. withdraw funds from a nonparticipating GIC that earns 5% interest

D. issue equity

E. issue debt

Reference no: EM13759678

Questions Cloud

Describe the steps in making sure that flights take off : Describe the steps in making sure that flights take off on time for an airline - Describe the different steps that must occur for an on-time plane departure.

What is the maximum cycle time : An assembly line with 20 tasks is to be balanced. The line will operate for 8 hours (or 480 minutes) per day. The longest task is 2.4 minutes, and the total time for all tasks is 15 m inutes. a. What is the maximum cycle time? b. What is the daily ou..

Airline check-in counter observes : The supervisor at the American airline check-in counter observes the following process characteristics: there are, on average, 30 customers either waiting in line or being help by an agent for check-in; the average amount of a passenger spends on che..

Supervisor at the american airline check-in counter observes : The supervisor at the American airline check-in counter observes the following process characteristics: there are, on average, 30 customers either waiting in line or being help by an agent for check-in; the average amount of a passenger spends on che..

Which bond is best for paul : Bonds A,B and C are all zero-coupon bonds. Bond A matures in 3 years, Bond B matures in 7 years, and Bond C matures in 10 years. Paul is uncertain as to the direction of interest rates over the next several years, so he wants to lock-in his return ov..

Belong within a project management plan : What are three important items that belong within a project management plan? What is the importance of breaking the project into phases? What is the importance of obtaining sponsorship approval when concluding each phase of the project?

Abby buys a position in a closed-end mutual fund : Abby buys a position in a closed-end mutual fund that is selling at an 8% discount. The fund earns 12%, but the discount decreases to 5%. What is Abby's return on this investment?A. 8.5%B. 12.0 %C. 12.4D. 14.2%E. 15.7%

Discount on the u.s. dollar for each forward rate : Assume you reside in the United States. Calculate forward quotes for the Canadian dollar as an annual percentage premium or discount. Would a FX trader in Canada get a different answer if asked to calculate the annual percentage premium or discount o..

The firm x has a 45 day accounts payable period : The firm X has a 45 day accounts payable period. The firm has expected sales of $1,800, $2,500, $2,600 and $2,800, respectively, by quarter for the next calendar year. The cost of goods sold for a quarter is equal to 55% of the next quarter sales. Wh..

User Account

All Pages