You own a bond that has a par value of $1,000 and matures in 5 years. It pays a 5 percent annual coupon rate. The bond currently sells for $1,100. What is the bond's expected rate of return?

Q: Why future value is important to calculate?

A: Future value is the value of what a certain asset/cash/instrument will be worth at a future…

Q: What is optimal capital budget?

A: Budget: The estimation of the income and expenditure of the particular future period and is…

Q: Assuming that the pure expectations theory is correct, how are expected short-termrates used to…

A: Pure expectations theory believes that expected future rates can be represented by the forward…

Q: standard deviation of historical returns Market beta Tracking error risk Discuss in what scenario…

A: In financial terms, risk can be defined as the possibility that the real profits from an outcome or…

Q: Explain the term Annual Effective Yields?

A: Annual effective yield: Annual effective yield is defined as the simple rate of interest that gives…

Q: Define adjusted beta

A: Beta is a measure of stock’s volatility in response to the market variations.

Q: what are the possible causes of favourable Wage rate variance

A: Labor or wage Rate variance: The labor rate variance measures the difference between the actual and…

Q: What happens if the payback period is within the acceptable range?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: Can you teach me all of this on how to solve a problem in each topic?…

A: "Since you have posted a question with multiple subparts, we will solve the first three subparts for…

Q: What is the marginal rate of return? How is it calculated?

A: Answer: Marginal rate of return can be defined as the return obtained or received by means of…

Q: Define an inverted yield curve. What does it indicate?

A: A yield curve is a graph that shows the yields of bonds with different maturities. Normally, a yield…

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: : (b) Write a detailed note on Minimum Attractive Rate of Return.

A: The minimum attractive rate of return (MARR) is the affordable rate of return utilized in the choice…

Q: What is a yield curve, and what information would you need todraw this curve?

A: Yield curve: It could be a line plotting bond yields (coupon rates) of comparative credit quality…

Q: Present value is a. the value now of a future amount. b. the amount that must be invested now to…

A: Present Value: It states that the value of  money today is worth more than the same amount of money…

Q: The down payment or equity needed for this investment is $60,000 (outflow) Cash Flow $15,000 5,000…

A: Investment  $  60,000.00 Saving Rate 1.50% Loan Rate 8%

Q: Present and Explain the theories of the Yield Curve?

A: The yield curve is a curve that shows the relationship between the interest rates and the different…

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: According to the pure expectations theory, what would happen if long-term rateswere not an average…

A: Expectation theory: The theory states that the future short term rate will be based on current long…

Q: How Broader Diversification Increases Expected Return?

A: The expected return on an investment refers to the weighted average of estimated returns and…

Q: How do you turn an income statement int a forecasted return? And how is it helpful?

A: Return means earn additional on invested amount. Return is a positive factor in every investment.…

Q: What does a high current ratio indicate?

A: Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: lternatives’ useful lives are different, B/C ratio analysis should preferably be based on: Select

A: Introduction : In simple words, the benefit to cost ratio is method to evaluate the effectiveness of…

Q: Explain real rate of return

A: This is the raw rate of return adjusted with inflation. It is used to ascertain the effective return…

Q: Explain expected rate of return

A: Return: Return is defined as the money attained or lost on an investment through certain time…

Q: Return on Return on Asset K in Return on State of Probability Asset J in Asset L in Economy of State…

A: Expected return = sum of (probability * return)

Q: When will the prime rate go up and what factors drive it?

A: The prime rate is the best interest rate you can get, and it's influenced by the economy.   In order…

Q: What is the expected spot rate?

A: A spot rate is a price quoted for immediate settlement on an interest rate, commodity, security, or…

Q: Describe the Incremental B/C-Ratio Analysis?

A: Benefit cost analysis: Benefit cost analysis refers to analyzing the desirability of project where…

Q: What are the Relationship between Yield and Time?

A: Yield refers to the measurement of returns of an investment in a period of time. It measures the…

Q: Why would the yield curve invert?

A: In finance yield curve is that line that shows yields (or interest rates) of those debt instruments…