A risk free private bond with a face value of 10,000 will mature in 1 year. If the market interest rate is 25% then a) the maximum price you are willing to pay for it is 5000. b) you should buy if the price is higher than 9000. c) you should buy if the price is lower than 5000 d) All of the answers are correct.
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A risk free private bond with a face value of 10,000 will mature in 1 year. If the market interest rate is 25% then
a) the maximum
b) you should buy if the price is higher than 9000.
c) you should buy if the price is lower than 5000
d) All of the answers are correct.
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- A company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the bond is 10.6%, then at what price should the bond trade?an index currently stands at 1,500. a 3 months future has a strike price of 1,515 the three-month risk-free rate is 6% p.a. what is the implied dividend yield?A stock you are evaluating is expected to experience supernormal growth in dividends of 12 percent over the next three years. Following this period, dividends are expected to grow at a constant rate of 4 percent. The stock paid a dividend of $1.50 last year and the required rate of return on the stock is 11 percent. Calculate the stock's fair present value. (Do not round intermediate calculations.) Please show all the steps, including the equation(s).
- An index is 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the next three months is 1.2% per annum. The six-month risk-free rate is 3.5% per annum and the dividend yield over the next six months is 1% per annum. Estimate the futures price of the index for three-month and six-month contracts. All interest rates and dividend yields are continuously compounded.A bond has a face value of $100 and coupon ratio of 5%. The bond matures in 10 years. What is the bond's yield-to-maturity if the bond is being traded at par (that is the bond price is $100)? Group of answer choices 4.8% Information is insufficient 5.3% 5%N Owns a Disability Income policy that will cover him to age 65, allhough the insurance company has the right to change the premium rate for the overall risk class to which N is assigned. Which of he following types of renewability best describes this situation? A.Noncancellable B.Cancellable C.Guaranteed Renewable D.Optionally Renewable
- Present worth is an equivalence method of analysis in which a project's cash flows are discounted to a single present value. True or false?"Mary is in contract negotiations with a publishing house for her new novel. She has two options. OPTION 1: She may be paid $90000 up front, and receive royalties that are expected to total $30000 at the end of each of the next 6 years. Alternatively, OPTION 2: she can receive $100000 up front and no royalties. Which of the following investment rules would indicate that she should take Option 1, given a discount rate of 5%? Rule I: The Net Present Value rule; Rule II: The Payback Rule with a payback period of 2 years.For Stock ABC the December next year Forward is $450. A call option on ABC, has a Strike of $420 and costs (premium) $50. What is the intrinsic and extrinsic value? A. Intrinsic $30, Extrinsic $30 B. Intrinsic $40, Extrinsic $10 C. Intrinsic $0, Extrinsic $30 D. Intrinsic $30, Extrinsic $20
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