You were just notified that you will receive $100,000 in two months from the estate of a deceased relative. You want to invest this money in safe, interest-beaning instruments, so you decide toI purchase five-year Treasury notes. You believe, however, that interest rates are headed down, and you will have to pay a lot more in two months than you would today for five-year Treasury notesYou decide to look into futures, and find a quote of 113-27.3 for five-year Treasures deliverable in two months (contracts trade in $100.000 unts and require an initial margin is $680) What does thequote mean in terms of price, and how many contracts will you need to buy? How much money will you need to buy the contract, and how much will you need to settle the contract?5-year Treasury notes are quoted at a par value of $100,000. Which of the following is the best answer? (Select the best answer below)OA Prices are quoted in increments of 1/32 of 1%, so the quote of 113-27.3 branslates into 113-27 3/32, which converts to a quote of 113.85313% of par Five-year Treasury notes have apar value of $10,000, so you will need to buy ten contractsPrices are quoted in increments of 1/32 of 1%, so the quote of 113-27.3 translates into 113-27 3/32, which converts to a quote of 113.85313% of par Five-year Treasury notes have apar value of $100,000, so you will need to buy one contractOC Prices are quoted in increments of 1/100 of 1%, so the quote of 113-27.3 translates into 113-273/100, which converts to a quote of 113.2730% of par. Five-year Treasury notes have apar value of $10,000, so you will need to buy ten contractsⒸD Prices are quoted in increments of 1/100 of 1%, so the quote of 113-27-3 translates into 113-27 3/100, which converts to a quote of 113 2730% of par Five-year Treasury notes have apar value of $100,000, so you will need to buy one contractThe initial margin deposit, or the amount money you will need to buy the contract(Round to the nearest dolar)

Investors are set to receive a substantial sum of $500,000 from the estate of a deceased relative.…

↑ You were just noted that you will receive $100,000 in two months from the estate of a deceased relative purchase five year Treasury notes You believe, however, that interest rates are headed down You decide to look into futures, and find a quole of 113-27 ve-year Treasurer OA Prices are used in increments of 132 of 1%, so the quote of 113-273 ales into 113-27 3/32, which converts s par value of $10,000, so you will need to buy ten contracts Prices are quoted in increments of 132 par value of $100.000 s money s ODPrices are quoted in increments of 1/100 par value of $100.000, rest-bearing instruments, so you decide to year Treasury holes quote of 113-27.3 translates into 113-27 3/32, which converts to a quote of 113.85313% of par Five-year Treasury notes have a OC Prices are quoted in increments of 1/100 of 1%, so the quote of 113-273 antes into 113-273/100, which converts to a quote of 1132730% of par. Five year Treasury notes have s par value of $10,000, so you will need en contracts 1%, so the quote of 113-273 ansates into 113-27 3/100, which convers quote of 113 2730% of par Five-year Treasury notes have a

↑ You were just noted that you will receive $100,000 in two months from the estate of a deceased relative purchase five year Treasury notes You believe, however, that interest rates are headed down You decide to look into futures, and find a quole of 113-27 ve-year Treasurer OA Prices are used in increments of 132 of 1%, so the quote of 113-273 ales into 113-27 3/32, which converts s par value of $10,000, so you will need to buy ten contracts Prices are quoted in increments of 132 par value of $100.000 s money s ODPrices are quoted in increments of 1/100 par value of $100.000, rest-bearing instruments, so you decide to year Treasury holes quote of 113-27.3 translates into 113-27 3/32, which converts to a quote of 113.85313% of par Five-year Treasury notes have a OC Prices are quoted in increments of 1/100 of 1%, so the quote of 113-273 antes into 113-273/100, which converts to a quote of 1132730% of par. Five year Treasury notes have s par value of $10,000, so you will need en contracts 1%, so the quote of 113-273 ansates into 113-27 3/100, which convers quote of 113 2730% of par Five-year Treasury notes have a

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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= You were just notified that you will receive $100,000 in two months from the estate of a deceased relative You want to invest this money in safe, interest-bearing instruments, so you decide to purchase five-year Treasury notes. You believe, however, that interest rates are headed down, and you will have to pay a lot more in two months than you would today for five-year Treasury notes. You decide to look into futures, and find a quote of 108-28.7 for five-year Treasuries deliverable in two months (contracts trade in $100,000 units and require an initial margin is $680). What does the quote mean in terms of price, and how many contracts will you need to buy? How much money will you need to buy the contract, and how much will you need to settle the contract? XO 5-year Treasury notes are quoted at a par value of $100,000. Which of the following is the best answer? (Select the best answer below.) OA. Prices are quoted in increments of 1/32 of 1%, so the quote of 108-28.7 translates into…
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
You are considering investing in a security that will pay you RM1,000 in 'n' years. Required: How long do you have to invest if you start the investment of RM250 today with the appropriate discount rate of 10 percent quarterly? i. ii. Assume these securities sell for RM365, in return for which you receive RM1,000 in 30 years. What is the rate of return investors earn on this security if they buy it for RM365?
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $100 in 2020 at the then current interest rate of .22 percent year, how much would the bond be worth in 2028? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2028, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2038. What annual rate of return will you earn over the last 10 years?
Suppose someone offered to sell you a note calling for the payment of $1,000 15 months from today. They offer to sell it to you for $850. You have $850 in a bank time deposit which pays a 7% effective annual interest rate (compounding), and you plan to leave the money in the bank unless you buy the note. The note is not risky--you are sure it will be paid on schedule. Should you buy the note?
You are considering purchasing a bond. The bond will pay you $100 at the end of each year for three years. At the end of the third year, the bond will also pay you back its $1,000 face value. Assuming a 10% discount rate, how much is this bond worth today? Round to the nearest dollar. I am having trouble calculating how much this bond is worth today. Thank you!
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $50. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $50 in 2020 at the then current interest rate of .28 percent year, how much would the bond be worth in 2030? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2030, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2038. What annual rate of return will you earn over the last 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Rate of return b. Bond value c. Rate…
The amount of money originally put into an investment is known as the present value P of the investment. For example, if you buy a $50 U.S. Savings Bond that matures in 10 years, the present value of the investment is the amount of money you have to pay for the bond today. The value of the investment at some future time is known as the future value F. Thus, if you buy the savings bond mentioned above, its future value is $50. If the investment pays an interest rate of r (as a decimal) compounded yearly, and if we know the future value F for t years in the future, then the present value P = P(F, r, t), the amount we have to pay today, can be calculated using the formula below. P = F × 1 (1 + r)t We measure F and P in dollars. The term 1/(1 + r)t is known as the present value factor, or the discount rate, so the formula above can also be written as the following. P = F × discount rate (a) Explain what information the function P(F, r, t) gives you. The function…
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 16 years. Assume you purchase a bond that costs $75. a. What is the exact rate of return you would earn if you held the bond for 16 years until b. If you purchased the bond for $75 in 2017 at the then current interest rate of.21 c. In 2025, instead of cashing in the bond for its then current value, you decide to hold it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) percent year, how much would the bond be worth in 2025? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) the bond until it doubles in face value in 2033. What annual rate of return will you earn over the last 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,e.g..32.16.) a. Rate of return b. Value of bond c. Rate…
You have $5,000 to invest for the next year and are considering three alternatives:a. A money market fund with an average maturity of 30 days offering a current yield of 6% per year.b. A 1-year savings deposit at a bank offering an interest rate of 7.5%.c. A 20-year U.S. Treasury bond offering a yield to maturity of 9% per year.What role does your forecast of future interest rates play in your decisions?
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Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 24 years. Assume you purchase a bond that costs $25. a. What is the exact rate of return you would earn if you held the bond for 24 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $25 in 2020 at the then current interest rate of 15 percent year, how much would the bond be worth in 2031? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2031, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2044. What annual rate of return will you earn over the last 13 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)