3.) Suppose that deflation occurs in the U.S. economy and that the CPI (as a measure of f) isexpected to decrease an average of 1% per year for the next five years. A bond with a face (par)value of $10,000 and a life of five years (i.e., it will be redeemed in five years) pays an interest(bond) rate of 4% per year. The interest is paid to the owner of the bond once each year. If aninvestor expects a real rate of return of 3% per year, what is the maximum amount that shouldbe paid now for this bond?

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Answered: 3.) Suppose that deflation occurs in…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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2. A company that manufactures general-purpose transducers invested $2 million 4 years ago in high-yield junk bonds. If the bonds are now worth $2.8 million, what rate of return per year did the company make based on (a) simple interest and (b) compound interest?
4.
1. A community experiences linear population growth at a yearly rate of 3%. The population in 2000 was 27,500; what was the population in 1985? Formula = i= n = Amt. = 2. Alan purchased a jeep 20 years ago; today it is worth $500. The jeep depreciates at an annual rate of 10%, compounded annually; how much did Alan pay for the jeep? Formula = n = Amt. = i= 3. Alicia invests $10,000 into a mutual fund that experiences linear grow at an annual interest rate of 7%. What is the value of her investment in 120 months? Formula = i= n = Amt. = 4. A community's population increases monthly as a product of its current population and the periodic growth rate (yearly rate is 3%). The population in 2000 was 27,500; what was the population in 1990? Formula = i= Amt. = 5. Jay deposits $500 into an investment account having a 7% annual rate of interest. Interest is added at the time Jay closes his account (120 months from the time of his deposit) and is based on the amount he deposited. What is the…
If the inflation rate is 4% per year and the market interest rate is known to be 10% per year, what is the implied real interest (inflation-free) rate in this inflationary economy? The implied real interest (inflation-free) rate is%. (Round to two decimal places.)
3. An investment of $1000 is being used to fund payments of $125 at the end of each year for as long as possible with a smaller final payment to be made at the time of the last regular payment. The nominal annual interest rate is 6% compounded quarterly. What is the amount of the final payment?
11. Rabia invested $9000 per year in a mutual fund that averaged 13% net growth per year with interest compounded annually. How much interest had her investment earned after 8 years? a. $42 815.37 b. $4281.53 c. $13 342.29 d. $66 741.36 nmer
5) Approximately how long would it take to double an investment earning 4.95% nominal interest compounded annually? 15.9 years 15 years 14.8 years 14.3 years 14 years а. b. с. d. e.
2. Suppose your salary in 2014 is $60,000. If the annual inflation rate is 3%, what salary do youneed to make in 2020 in order for it to keep up with inflation?
Suppose that the spot price of copper is $3.25 per pound, the continuously compounded lease rate for copper is 4%, and the continuously compounded risk-free rate is 2%. Suppose that copper can be stored at zero cost. a)If you short sell copper for one year, what is the total cash flow(including both the cost of returning the copper borrowed and any lease payment) to the copper lender at the end of the year? b)What is the 1-year forward price of copper? c)If there are no arbitrage opportunities, what is the maximum possible 1-year forward price for copper? If the forward price were above this level, how could you take advantage of it?
2. A man wants to make 14% nominal interest compounded semi-annually on a bond investment. How much should the man be willing to pay now for a 12%, P 10,000 bond that will mature in 10 years and pays interest semi-annually?
Sears Holdings Corporation (SHLD) is one of the largest mall-based retailers in the United States. The following year-end data were taken from a recent Sears balance sheet (in millions): December 31 Year 2 Year 1 Current assets $6,045 $5,863 Current liabilities 5,438 5,595 a. Compute the working capital and the current ratio as of December 31, Year 1 and Year 2. (Round your answers to two decimal places.) Year 2 Year 1 Working capital $ fill in the blank 1 $ fill in the blank 2 Current Ratio fill in the blank 3 fill in the blank 4 b. If a company has a current ratio less than 1 and a working capital decline, what does it indicate?
F2.

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