At an annual effective interest rate of 5.1%, Asset A has a modified duration of 20.3 and a price of 1800. At the same rate, Asset B has a modified duration of 18.6 and a price of 1400. As a result of a change in the interest rate, the price of Asset A increases by an amount of X and the price of Asset B increases by X - 89. Estimate the new annual effective rate. Answers: 4.21% 4.08% 4.25% 4.17% 4.12%
Q: What is the yield to maturity of a nine year 5000 bond with a 5% coupon rate and semiannual coupons…
A: YTM is expressed as an annual percentage rate (APR) and is calculated using a complex formula that…
Q: an you please explain how you got the after tax salvage value of the equip
A: In MACRS there is fast depreciation during the initial years and later on decreases with time and…
Q: Companies within the Consumer Discretionary sector market their products and services to consumers,…
A: The Consumer Discretionary sector consists of companies that sell non-essential goods and services…
Q: Your grandfather put some money into an account for you on the day you were born. You are now 18…
A: It represents the expected amount or value of the current asset at a future date. It is estimated by…
Q: Pharmos Incorporated is a Pharmaceutical Company which is considering investing in a new production…
A: Terminal cash flow is the cash flow other than the operating cash flow at the end of the project…
Q: An investor was afraid that he would become like King Lear in his retirement and beg hospitality…
A: Here , present value of annuity is given as 460 pounds which will give uniform payments of 61 pounds…
Q: You are a new loan officer with Alpha Mortgage, and the manager of the loan department has just…
A: The lender’s calculation of APR may be rounded to a quarter of a percentage nearest to it. After…
Q: Suppose on January 15, 2018, the U.S. Treasury issued a ten-year inflation indexed note with a…
A: CPI on January 15,2018 = 215 CPI on January 15, 2018 = 165 The change in CPI is % change…
Q: Probability 0.15 0.20 2.0.35 0.20 0.10 8.65 2.94 Based on the above information, what is the risk…
A: To calculate the standard deviation of a probability distribution, we first need to calculate the…
Q: Bond C has a $1,000 face value and provides an 8% annual coupon for 30 years. The appropriate…
A: The current price of the value of the bond is equal to the PV of all the coupons payable plus the PV…
Q: Consider a T-bill with a rate of return of 6% and the following risky securities: Security A:…
A: These are investors whose preference and tendency is to avoid risk. Thus, such kinds of investors…
Q: If the rate of inflation is 4.5%, what nominal interest rate is necessary for you to earn a 2.5%…
A: Nominal interest rate is the simple interest rate that you pay to lender for use of money. Nominal…
Q: After making an investment, an investor learns that Intel stock is now undervalued. This is an…
A: Investment refers to the purchase of assets or securities with the intention of generating a return…
Q: Stefano takes out a 5 year mortgage for $1,100,000 at an interest rate of i(12) = 4.750%. The…
A: To solve this problem, we need to use the mortgage formula to calculate the weekly payments, and…
Q: The debt is amortized by equal payments made at the end of each payment interval. Compute (a) the…
A: A loan is a financial arrangement where one party (the lender) provides money or assets to another…
Q: Last year Pilya, Inc. had P50 million in total assets. Management desires its plant and equipment…
A: Weighted average cost of capital is the weighted cost of equity and weighted cost of debt. Weighted…
Q: Subject: Financial strategy & policy 1) A leasing contract calls for an immediate payment of…
A: Time, value of money defines the money receive is more valuable than the amount will receive in…
Q: 731 million dollars in an IPO or $20 per share. The company raised this capital in the: IPO…
A: The different kind of market exist in order to raise money by the company the primary market is the…
Q: EXPLAIN GREEN BONDS, CARBON PRICING, AND CARBON TAXES FOR PROMOTING SUSTAINABLE FINANCE
A: The term "sustainable finance" refers to financial activities that promote long-term economic…
Q: How are prices for derivative securities quoted and how should this information be interpreted?
A: Derivative securities are financial instruments that derive their value from an underlying asset,…
Q: Jarett & Sons' common stock currently trades at $38.00 a share. It is expected to pay an annual…
A: Cost of new common stock is defined as the minimum rate that is needed to be earned in order to…
Q: Current Attempt in Progress Define systematic risk. BIU T₂ T² I lil Iml bd E lod 3 99
A: When you invest money in the stock there is risk involved. Risk involved means that your value of…
Q: At the time of her grandsons birth a grandmother deposits 13,000 in an account that pays 6.5%…
A: PV=Initial deposit = 13000 r=rate=6.5% (compounded monthly) n=21 years Monthly rate=r= 6.5%/12 No…
Q: given the following data, find the expected rate of inflation during the next year. * = real…
A: Based on the going interest rate on 1-year t-bonds, the expected rate of inflation during the next…
Q: Subject: Financial strategy & policy Fill in the blanks in the following table: Nominal Interest…
A:
Q: Corporate governance refers to O the idea that a corporate CEO is really accountable to no one and…
A: The question is asking about the definition of corporate governance. Corporate governance refers to…
Q: You hold a diversified portfolio consisting of a $15,082 invested in each of 5 different common…
A: Portfolio Beta = 1.13 Total Investment = $15,082 Number of stocks = 5 Removing stock beta = 0.8…
Q: Use the word bank to complete the following. Reserve is a regulation requiring commercial banks to…
A: Banks are financial entities that facilitate the flow of money in the economy. There are several…
Q: Problem #5: A 10-year bond has face value (redemption value) $650,000 and quarterly coupons of 3%.…
A: The most important factor in bond valuation is yield to maturity (YTM). Bonds are compared based on…
Q: year
A: To calculate the present value of the bond, we first need to calculate the value of each coupon…
Q: A 3-year bond with 10% coupon rate and $1000 face value yield to maturity is 8% . Assuming annual…
A: Solution:- Bond price means the price at which a bond is trading in the market. It is the summation…
Q: Analyze the financial status of Starbucks in the last five years (2018-2022), and give data and…
A: Starbucks is a multinational coffeehouse chain based in Seattle, Washington, in the United States.…
Q: Corporate owners earn a return O through interest earnings and earnings per share O by realizing…
A: Corporate owners earn a return by realizing gains through increases in share price and cash…
Q: Why should the cost of capital used in capital budgeting be calculated as a weighted average of the…
A: Cost of capital is the minimum rate of return that a company must earn on its investments in order…
Q: The market price is $1,150 for a 9-year bond ($1,000 par value) that pays 12 percent annual…
A: Bonds are debt instruments issued by companies. Yield to maturity is the total rate of return that…
Q: Firm ABC has a bond with face value of $100, coupon rate of 6%, and a 10-years maturity. Firm ABC…
A: Present value refers to the current value of an asset that will be present at some future date. It…
Q: A. What factors are responsible for the recent surge in international portfolio
A: International portfolio investment means, investing not the listed companies of their own countries…
Q: Gray Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D₁ =…
A: The question asks us to calculate the expected growth rate of the dividend for Gray Manufacturing,…
Q: ifies for $0 down payment but makes a $2,500 down payment on his car purchase anyway. Will this…
A: While you purchase the car than you generally take loans and pay by monthly payments because monthly…
Q: Consider the following two projects: Net Cash Flow Each Period Initial Outlay 1 2 3 4…
A: Capital budgeting techniques are used by businesses to evaluate and prioritize potential investments…
Q: You deposit 2,000 in an account that pays 7% interest compounded semiannually.after two years the…
A: The concept of time value of money will be used here. Money deposited today gets computed and hence…
Q: uppose that the consensus forecast of security analysts of NoWork Inc. is that earnings next year…
A: As per the guidelines, I am required to answer only the first 3 questions. According to the dividend…
Q: Statements the following statements is true of Tal An incentive program that encourages new ideas,…
A: Capital expenditure means amount that the company spends on purchasing, maintaining, or improving…
Q: Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon…
A: The payback period is a financial metric that represents the time required for a project to recoup…
Q: Annuity - Present Value. What is the present value of David's investment if he invests $2,800.75 at…
A: Present value of the annuity is calculated using following equation Present value =…
Q: WC12 Waterways puts much emphasis on cash flow when it plans for capital investments. The company…
A: The difference between the current value of cash inflows and outflow of cash over a period of time…
Q: Kevin invested $1,000 in large U.S. stocks at the beginning of 2012. This investment earned 16.30…
A: Average return refers to the return that the investment generates on average throughout the years.…
Q: You are considering acquiring a common stock that you would like to hold for one year. You expect to…
A: In the given case, we have provided the expected dividend for the year, end price of the stock in…
Q: Consider the following information on large-company stocks for a period of years. Large-company…
A: a. The arithmetic mean of annual return is calculated without considering the inflation. Therefore…
Q: e: ollecting an epreciating lling invent
A: Net working capital is the difference between current assets (cash at hand, cash in the bank,…
At an annual effective interest rate of 5.1%, Asset A has a modified duration of 20.3 and a price of 1800. At the same rate, Asset B has a modified duration of 18.6 and a price of 1400. As a result of a change in the interest rate, the price of Asset A increases by an amount of X and the price of Asset B increases by X - 89. Estimate the new annual effective rate. Answers: 4.21% 4.08% 4.25% 4.17% 4.12%
Step by step
Solved in 3 steps
- 1An annual percentage rate (APR) is determined by annualizing the rate using compound interest. Select one: True False 2The more frequent the compounding, the higher the future value, other things equal. Select one: True False 3Which statement is NOT true?  a. Figure A correctly displays the relation between FVs of $1 investment at the interest rates 12.7% and 9.8%. b. Investment of $1 needs more than 7 years to double its value at the rate 9.8%, while only requiring less than 6 yeas to double at 12.7%. c. Figure B correctly displays the relation between PVs of $3 future value at the interest rates 12.7% and 9.8%. d. A discount factor for 5 years at 12.7% is lower than the discount factor for 5 years at 9.8%.An annual percentage rate (APR) is determined by annualizing the rate using compound interest. Select one: True False The more frequent the compounding, the higher the future value, other things equal. Select one: True False Which statement is NOT true?  a. Figure A correctly displays the relation between FVs of $1 investment at the interest rates 12.7% and 9.8%. b. Investment of $1 needs more than 7 years to double its value at the rate 9.8%, while only requiring less than 6 yeas to double at 12.7%. c. Figure B correctly displays the relation between PVs of $3 future value at the interest rates 12.7% and 9.8%. d. A discount factor for 5 years at 12.7% is lower than the discount factor for 5 years at 9.8%. After reading the fine print in your credit card agreement, you find that the "low" interest rate is actually an 17.05% APR, or 1.4208% per month. What is the effective annual rate? a. 18.45% b. 19.41% c. 18.82% d. 19.56% A zero-coupon bond is a bond that pay no interest…Present Value of Amounts Due Assume that you are going to receive $730,000 in 10 years. The current market rate of interest is 4.5%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. b. Why is the present value less than the $730,000 to be received in the future? The present value is less due to the compounding of interest V over the 10 years.
- 2. An analyst is given the following effective annual rates: 3-year spot rate = 4% 5-year spot rate = 5% 4-year forward rate 3 years from today = 6% 3-year forward rate 7 years from today = 7% Find the 2-year forward rate 5 years from today? (1 + y )ª®1 + ³ = (1 + y ₂)²1 + ²√³ (1 + 4%) *(1 + 6%) ª = (1 + 5%) ²1 + ³ ⇒ f = 5.48%a) What is the present value of the following payment series when the interest rate is 3% YR1 = $200YR2 = $100YR3 = $370YR4 = $370YR5 = $370YR6 = $-300 b) Convert the above payment series to a uniform payment series over 5 years, starting at year 1. c) Convert the payment series in question 6 to a uniform payment series over 3 years starting at year 3.1. Determine the discount rate assuming the PV of $1080 at the end of 1-year is $980? 2. $9,800 is deposited for 10 years at 6% compounded annually, determine the FV? 3. What will be the present value, if $6,800 is discounted back 4 years at an interest rate of 4% compounded semi-annually
- Assume that l2t =0.25% and that l1t = O. If the one-year interest rate is 5% and the two-year interest rate is 5.75%, then i1 is equal to: O A.6% O B. 5.75% O C. 5.50% O D. 5.25%An investment accumulates at a force of interest δt = 0.01t / (3 + 0.01t^2) . Find the present value at time t = 0 of $3,900 due at the end of 7.5 year.ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +
- Present value = $100; Interest rate = 5%; Number of years 11 (assume annual compounding). What is the future value? Group of answer choices 171.03 155.00 55.00 223.13 Answer with Explanation and with reason of answer is correct or incorrectThe effective annual interest rate is given to be 19.2%. What is the nominal interest rate per year (r) if continuous compounding is being used? Choose the closest answer below. (a) 19.83% (b) 18.55% (c) 17.56% (d) 16.90%If an initial investment of $1,000 is invested at 8% interest per year with semi-annual compounding, how much would be in the account after five years? A. $1,081.60 B. $1,061.66 C. $1,051.00 D. $1,281.60 The difference between the present and future worth of money at some time in the future is called A. Discount B. Deduction C. Inflation D. Depletion