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7. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $120,000 at age 60, the firm will pay the retiring professor $850 a month until death. If the professor's remaining life expectancy is 30 years. What is the effective annual rate (EAR)? 8. On the issue date, you bought a 30-year maturity, 8% semi-

7. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $120,000 at age 60, the firm will pay the retiring professor $850 a month until death. If the professor's remaining life expectancy is 30 years. What is the effective annual rate (EAR)? 8. On the issue date, you bought a 30-year maturity, 8% semi-

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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7. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $120,000 at age 60, the firm will pay the retiring professor $850 a month until death. If the professor's remaining life expectancy is 30 years. What is the effective annual rate (EAR)? 8. On the issue date, you bought a 30-year maturity, 8% semi- annual coupon bond. The bond then sold at YTM of 7%. Now, five years later, the similar bond sells at YTM of 6%. If you hold the bond now, what is your realized rate of return for the 5-year holding period? 9. Todd Co. just paid dividends of $5.00 (DO) per share. These dividends are expected to grow at a 12% rate for the next four years and at a 4% rate thereafter (forever). What is the value of the stock if the appropriate discount rate is 10% ?
Transcribed Image Text:7. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $120,000 at age 60, the firm will pay the retiring professor $850 a month until death. If the professor's remaining life expectancy is 30 years. What is the effective annual rate (EAR)? 8. On the issue date, you bought a 30-year maturity, 8% semi- annual coupon bond. The bond then sold at YTM of 7%. Now, five years later, the similar bond sells at YTM of 6%. If you hold the bond now, what is your realized rate of return for the 5-year holding period? 9. Todd Co. just paid dividends of $5.00 (DO) per share. These dividends are expected to grow at a 12% rate for the next four years and at a 4% rate thereafter (forever). What is the value of the stock if the appropriate discount rate is 10% ?
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