. A $3,000 face-value bond matures in three years and pays 8% per year payable semiannually (4% very six months). An investor wants a 10% return per year compounded semiannually. a. How much should the investor pay for the bond?
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- Suppose you purchased a corporate bond with a 10-year maturity, a $1,000 par value, a 9% coupon rate ($45 interest payment every six months), and semiannual interest payments. Five years after the bonds were purchased, the going rate of interest on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (five years after the purchase)?(a) P = $890(b) p = $1,223(c) P = $1,090(d) p = $1,128Consider a bond with a face value of $2,136 that pays a coupon of $100 for 10 years. Suppose the bond is purchased at $400, and can be resold next year for $450. What is the rate of return of the bond? a. 1.125% b. 1.375% c. 25% d. 37.5%suppose that you invest $100 today in a risk-free investment and let the 4 percent annual intrest rate compound. Rounded to the full dollars, what will be the value of your investment 4 years from now?
- The sole proprietor of the FM2 Financial Services, Bondo, receives allaccounting profits earned by her firm and a K28,000-a-year salary she pays herself. Itis noteworthy that she also has a standing salary offer of K35,000 a year if she agreesto work for Bank of Zambia. If she had invested her capital outside her own company,she estimates that would have made a return of K22,000 a year. Further, informationhas reached you that last year, Bondo’s accounting profit was K50,000. Calculate hereconomic profit?A corporate bond returns 12 percent of its cost (in present value terms) in the first year, 11 percent in the second year, 10 percent in the third year, and the remainder in the fourth year. What is the bond's duration in years? Please show all the steps including the equation.Which of the following investment options willmaximize your future wealth at the end of 18 years?Assume any funds that remain invested will earn anominal rate of 12% compounded monthly.(a) Deposit $8,000 now.(b) Deposit $120 at the end of each month for thefirst 12 years.(c) Deposit $105 at the end of each month for 18years.(d) Deposit a lump sum in the amount of $35,000 atthe end of year 12.
- A Php 1,500-bond which will mature in 10 years and with a bond rate of 15% payable annually is to be redeemed at par at the end of this period. If it is sold now for Php 1,390, determine the yield at this price. (Answer is in percentage.) Use continuous computations, round off your final answers to two (2) decimal places.Suppose that you, on 1st of January 2023, enter a long position in a 10-year forward contract on a non-dividend-paying stock. The stock price is $50 and the risk-free rate of interest is 5% per annum with yearly compounding (as per 1st of January 2023). a) What are the forward price and the initial value of the forward contract? Five years later, 1st of January 2028, the price of the stock is $60 and the risk-free interest is still 5%. b) On 1st of January 2028, what are the forward price and the value of the forward contract that you entered into on 1st of January 2023? Explain. c) Suppose that you on 1st of January 2028 enter a short position in a forward contract on the same underlying stock and with expiration date in 5 years. What is the value of your total position? (I.e. what is the total value of the long position in the forward contract in a) and your short position). What is the payoff of your total position at maturity? d) On 1st of January 2028, what is the value…▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $enter your response here. (Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $enter your response here. (Round your response to the neareast two decimal place)
- Your sister has been offered a 5-year bond with a P1,000 par value and a 7 percent coupon rate. This bond's interest is paid semi-annually. If your sister is to earn a nominal rate of return of 9 percent, compounded semi-annually, how much should she pay for the bond?You plan to open a retirement account. Your employer will match 50% of your deposits up to a limit on the match of $2,500 per year. You believe the fund will earn 12% over the next 30 years, and you will make 30 deposits of $5,000, plus 50% employer matching, totaling $7,500 per year. a. How much money will be in the account immediately after the last deposit? b. How much total money will you put into the fund?Susie Lee won a lottery. She will have a choice of receiving $25,000 at the end of each year for the next 30 years, or a lump sum today. If she can earn an annual return of 10 percent on any investment she makes, what is the least she should be willing to accept today as a lump-sum payment? (Round to the nearest hundred dollars.) Use the NPV as you have equal cash flows of $25,000 for the next 30 years.