Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Your friend told you about an NFT (Non-fungible Token) that they think will be worth $842 in 7 years. If your required return on investments of this risk is 13.2%, what is the most you should be willing to pay for it today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. Answer:arrow_forwardDetermine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $19,000, r = 11.5%, t = 4 years The present value that must be invested to get $19,000 after 4 years at an interest rate of 11.5% is $. (Round up to the nearest cent.)arrow_forwardYou are considering the purchase of real estate that will provide perpetual income that should average $54,000 per year. How much will you pay for the property if you believe its market risk is the same as the market portfolio’s? The T-bill rate is 6%, and the expected market return is 9.0%. Property Value =arrow_forward
- # 2: An investment will pay $100 at the end of each of the next 3 yrs, $200 at the end of yr 4, $300 at the end of yr 5, and $500 at the end of yr 6. If other investments of equal risk earn 8% annually what is FV1?arrow_forwardPresent Value =PV Please see imagearrow_forwardYour friend told you about an NFT (Non-fungible Token) that they think will be worth $996 in 6 years. If your required return on investments of this risk is 16.5%, what is the most you should be willing to pay for it today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.arrow_forward
- Give only typing answer with explanation and conclusionarrow_forwardInterest rate (with changing years). Keiko is looking at the following investment choices and wants to know what annual rate of return each choice produces. a. Invest $420.00 and receive $879.72 in 9 years. b. Invest $3,400.00 and receive $11,161.14 in 15 years. c. Invest $32,893.92 and receive $140,000.00 in 24 years. d. Invest $31,322.65 and receive $1,300,000.00 in 45 years. a. What annual rate of return will Keiko earn if she invests $420.00 today and receives $879.72 in 9 years? % (Round to two decimal places.)arrow_forwardSuppose the term structure of risk-free interest rates is as shown here: a. Calculate the present value of an investment that pays $1,000 in 2 years and $4,000 in 5 years for certain. b. Calculate the present value of receiving $900 per year, with certainty, at the end of the next 5 years. To find the rates for the missing years in the table, linearly interpolate between the years for which you do know the rates. (For example, the rate in year 4 would be the average rate in year 3 and year 5.) c. Calculate the present value of receiving $2,700 per year, with certainty, for the next 20 years. Infer rates for the missing years using linear interpolation. (Hint: Use a spreadsheet.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) 2 years 3 years 5 years 7 years 1 year 2.06 2.44 2.64 3.22 3.74 Term Rate (EAR, %) Print Done 10 years 4.25 20 years 5.09 I X t cent.)arrow_forward
- Future Value You invest $1,000 today and exect to sell the investment for $2,000 in 10 years. a. Is this a good deal if the investment rate is 6%? b. What if the interest rate is 10%? Why ? Show the calculations in Excel.arrow_forwardBy using formula please;;arrow_forwardWhat is the no arbitrage price of a risk-free investment that promises to pay $1,000 in one year? The risk-free interest rate is 3.5%. If you can purchase the investment for $950, do you have an arbitrage opportunity?arrow_forward
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