Bond Value Coupon rate Interest Due Maturity Require Rate of Return Offered Price 10,000 8% Semi-Annual 10 yrs 10% 98 3/4 Required: Calculate the Exact and Approximate YTM.
Q: C. D. Rom has just given an insurance company $39,500. In return, he will receive an annuity of…
A: Present Value (PV) = $39,500.00 Payment (PMT) = $5,200.00 No. of years (Nper) = 20 Future Value…
Q: You calculated the value of a stock to be $108. The stock pays a dividend of $7.6. What is the most…
A: A stock represents a share of ownership in a publicly-traded company. value of stock = $108 Dividend…
Q: For the Year Ended December 31, 20X1 Sales (23,000 tires at $66 each) Variable costs (23,000 tires…
A: Since you have posted a question with multiple sub-parts , we will solve first three sub-parts for…
Q: Identify and explain three different dividend policies.
A: Companies pay dividend to their shareholders. Each company has a policy to determine dividend…
Q: Boeing (BA) shares currently sell for $330/share. BA expects to pay a $6.85/share dividend in…
A: The lower bound on the price of the European put option on a divided paying stock has to be…
Q: How do you compute the earnings per share for the three years for Walmart?
A: Introduction: Earning per share Formula for Earning Per Share=Net Income-Preferred DividendsEnd of…
Q: In December 1994, the government of Mexico officially changed the value of the Mexican peso from 3.2…
A: The foreign exchange rate of a currency can be changed due to different reasons. The first prominent…
Q: d The company's is considering introducing a new detergent. collected the following information…
A: NPV means PV of net benefit arises from the project in the future. It can be computed simply by…
Q: Q1) Explain the capital asset pricing model (CAPM) and its relationship to the security market line…
A: CAPM is Capital Asset Pricing Model which describes the relationship between expected return and…
Q: Taylor Jones has a Insurance policy that returns every cent she pays in premiums if she outlives the…
A: Insurance is a contract between an individual (the policyholder) and an insurance company. Under the…
Q: Eaton Tool Company has fixed costs of $435,600, sells its units for $94, and has variable costs of…
A: Fixed cost = fc = $435,600 Sells per unit = s = $94 Variable cost per unit = vc = $50
Q: The Chester E Peters recreational center, in its current form, was completed in three phases. Phase…
A: Fomrula of converting in today's dollar is : Value of cost today (2021) = BCI value in 2021BCI…
Q: Give typing answer with explanation and conclusion A $50,000, 8% bond with semi-annual coupons is…
A: Bond Face Value = $50,000 No. of years = 3 Semi-annually years = 3 x 2 = 6 Coupon Rate = 8% YTM =…
Q: An individual actually earned a 4% nominal return last year. Prices went up by 3% over the year.…
A: The real after-tax rate of return is a financial metric that measures the actual return on an…
Q: Critically evaluate the role of credit rating agencies.
A: Credit rating agencies (CRAs) are independent entities that provide assessments of the…
Q: Last year Tonu, Inc. had P50 million in total assets. Management desires to increas its plant and…
A: Weighted average cost of capital is the weighted cost of equity and weighted cost of debt. Weighted…
Q: Find the present value PV of the annuity account necessary to fund the withdrawal given. (Assume…
A: A series of periodic payments made at each regular interval is recognized as an annuity. The current…
Q: expiration 6 months Standard deviation 50% per year Exercise price $52 Stock price $52 Annual…
A: Please note that under the answering guidelines up to 3 sub questions can be answered. Please repost…
Q: Solve it
A: To calculate the project's IRR, we need to find the discount rate that makes the net present value…
Q: Initial cash flow is (-10000). Cash flow in the next period (+20000). The opportunity cost during…
A: NPV is short abbreviation of net present value of project assessment. The net of present value of…
Q: An investor is trying to decide between a muni paying 5.75% or an equivalent taxable corporate…
A: Municipal bond yield = 5.75% Corporate bond yield = 8.25% The formula to be used is…
Q: Assume a $290,000 investment and the following cash flows for two products: Year Product X Product Y…
A: The process that analyzes and evaluates any project or investment's feasibility and profitability is…
Q: g Industries is considering a proposed project whose estimated NPV is $12 million. This estimate…
A: Standard deviation is square root of the sum of square of deviation from mean and standard deviation…
Q: Innovation Company is thinking about marketing a new software product. Upfront costs to market and…
A: Here, Initial Investment is $4.98 million Annual Profit for 10 years is $1.06 million Annual Cost…
Q: Calculate the purchase price of the $1,000 face value bond using the information given below. (Do…
A: Face value = fv = $1000 Compound = semiannually = 2 Coupon rate = 5.75 / 2 = 2.875% Interest rate =…
Q: Suppose that a small candy store makes Valentine's Day gift boxes that cost $14.00 and sell for…
A: An excel based financial model has to be designed for simulation. Parameters have been defined.…
Q: William North has just inherited $1,066,000 which he would like to use as part of his retirement…
A: Money received today is worth more than money that will be due at some point in the future. The…
Q: A $2600 certificate of deposit held for 88 days was worth $2635.59. What simple interest rate was…
A: The present value and the future value of a certificate of deposit are known. The simple rate of…
Q: Oweninc has a current stock price of $13.00 and is expected to pay a $0.85 dividend in one year. If…
A: The growth rate is a measure that expresses the yearly change in an asset as a percentage.
Q: The following questions are based on the series of the following cash flows. You plan to sell the…
A: The quantum and timing of cash flows emanating from the purchase, hold and sale transaction of a…
Q: Policy $168 132 1,290 1.5%
A: To calculate the NPV of switching to the proposed credit policy, we need to compare the present…
Q: after tax salvage value of packaging equipment which is 350,000 added to terminal cash flow instead…
A: The companies invest in the equipment to earn profit but these equipment become obsolete after some…
Q: Hungry Whale Electronics is considering an investment that will have the following sales, variable…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: A stock is expected to paid a dividend of f $2.9 you just sold it for $218. If you bought it for…
A: A stock's return is the change in its price over a period of time, plus any dividends or other…
Q: Determine the necessary working capital using the maximum deficit method, for project "X" with the…
A: Working capital, commonly called net working capital (NWC), is the difference between a company's…
Q: paid by a company that has a current stock price of $125.00, a dividend yield of 8.6% and dividends
A: Here given Dividend Yield = D1/P = 8.6%, given growth in dividend = 4.2%, P = current share price =…
Q: Use the following returns for X and Y. Year 1 2 3 4 5 21.18 -16.1 9.1 Returns 18.2 4.1 Y 24.38 -3.1…
A: It measures the difference between the data points relative to the mean. It is estimated by taking…
Q: Compute the following ratios: Note: Use a 360-day year. Do not round intermediate calculations.…
A: Current ratio = Current assets/Current liabilities = (Cash+Accounts receivable+Inventory)/(Accounts…
Q: 4 b) Your company wants to purchase a phtostat machine which costs RM15,000. It will be obsolee in 5…
A: Lease Option is that option under which buyer would pay the fixed amount every year against taking…
Q: 9 Henrie's Drapery Service is Investigating the purchase of a new machine for cleaning and blocking…
A: Machine cost = $170,595 Net cash inflows = $45,000 Life of machine = 5 years
Q: he balance sheet for Revolution Clothiers is shown below. Sales for the year were $3,200,000, with…
A: A ratio is a mathematical relationship between two variables. The investor can evaluate the…
Q: On the same day, five fortune 500 companies all report lower sales and earnings than expected. All…
A: The externality is the cost or benefit borne by a third party as a result of an economic transaction…
Q: Project L requires an initial outlay at t = 0 of $52,799, its expected cash inflows are $9,000 per…
A: IRR stands for "Internal Rate of Return". It is a financial metric used to evaluate the…
Q: Jesse has a good job and pays off his one credit card every month. He was surprised that when he…
A: A credit report is an important document in the world of finance. It is simply a statement that…
Q: Explain the important for managers to understand the importance of both the internal growth rate and…
A: Managers are agents of the shareholders in a company. The managers work in a manner so that…
Q: Use PMT= to determine the regular payment amount, rounded to the nearest cent. The cost of a home is…
A: Mortgage amount = $130,000 Loan period = 20 years Interest rate = 4.5%
Q: invest funds in a stock market index fund whose share price is currently K100, and your time horizon…
A: The holding period return is the return % you receive for holding the asset for that period of time.…
Q: A project has expected cash flows with a present value of $75 million. The annual standard deviation…
A: There is an option to delay the project. Same needs to be valued. Black Scholes Option pricing model…
Q: Risk management comes with benefits to the banks and the whole financial system. State and explain…
A: Risk management is the process of identifying, assessing, and controlling risks that could affect an…
Q: What sum of money must be deposited in a trust fund to provide a scholarship of $1550, quarterly for…
A: A scholarship perpetuity refers to a scholarship that is paid out indefinitely or perpetually,…
Bond Value |
Coupon rate |
Interest Due |
Maturity |
Require |
Offered Price |
10,000 |
8% |
Semi-Annual |
10 yrs |
10% |
98 3/4 |
Required: Calculate the Exact and Approximate YTM.
Step by step
Solved in 5 steps
- What is the market risk premium (rM - rRF)? Format: 1.1%The following data are gathered:· The real risk-free rate is 1.05%· Inflation premium is constant at 2.60%· Default risk premium is 3.50%· Maturity risk premium is 2.30%· Liquidity risk premium is 1.50%What is the risk free rate?(Format: XX.XX%)Based on Table 3, what is the liquidity risk premium? Table 3 Investment 1 2 3 4 5 O 1.25% O 1.50% O 0.25% O 1.12% Maturity 2 2 7 8 8 Liquidity High Low Low High Low Default Risk Low Low Low Low High Interest Rate 1.00% 1.25% 2.25% 2.93% 4.43%
- State ofEconomy Probabilityof State Return on AssetDin State Return on AssetEin State Return on AssetFin State Boom 0.35 0.060 0.310 0.25 Normal 0.50 0.060 0.180 0.20 Recession 0.15 0.060 -0.210 0.10 A. Calculate the expected return (mean) for each security.The following data are gathered:· The real risk-free rate is 1.05%· Inflation premium is constant at 2.60%· Default risk premium is 3.50%· Maturity risk premium is 2.30%· Liquidity risk premium is 1.50%What is the risk free rate?Capital Asset Pricing Model (CAPM) - Risk Free rate Risk free rate (Rf)* Beta (B)* 1.10 Market risk premium* 7.00% Expected return (ER) 10.20%
- financial risk management Assume you have the following asset and liability in your Balance Sheet:Asset - Bond AModified Duration = 2.6 yearsValue= RM1.5 millionLiability - Bond BModified Duration = 3.1 yearsValue= RM1.0 million a. Calculate the duration gap.Consider 1-factor model and assume that the price of a certain fixed income security P(y) for y=9%, 9.05% and 8.95% is given by P(0.09)=$5,000; P(0.0905)=$4,980; P(0.0895)=$5,030. Find the estimate for DV01, Duration, and Convexity of this security. Keep at least 4 decimal digits while performing your calculations.Suppose we observe the following rates: 1R1= 0.75%, 1R2=1.20%, E(2r1)=0.907%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2, L2?
- The required return of a risk-free asset can be approximated by The pure time value of money and anticipated inflation premium. а. The 20-year T-bond yield. Ob. The 90-day T-bill rate plus the risk premium. C. The 90-day T-bill rate plus anticipated inflation premium. d.This first table describes prevailing market interest rates. Market Data Yield 0.05 Required: Using the yield above and the information contained in the table below, please calculate the price and duration of the bond as well as all necessary steps. (Use cells A5 to B5 from the given information to complete this question.) Time Until Payment Payment Discounted Payment Weight Time × Weight 1.00 $30.00 2.00 $30.00 3.00 $30.00 4.00 $1,030.00 Price: DurationThe information about asset X and Y are given as follows: Expected Standard Asset Return Deviation 10% 4% Y 15% 11% Correlation = -1 If it is possible to borrow at the risk-free rate, rf, calculate the following: Weight of Stock A: % (Round to two decimals) Weight of Stock B: % (Round to two decimals) Risk free rate: % (Round to two decimals)