A security has a development worth of 100,000; its coupon rate is 4% and its yield is needed to be 8%. What might a purchaser pay for this security if the security is expected a long time from now?
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A: A perpetuity is a type of annuity that lasts forever.
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A: Market price: It is the current rate which is in market.
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Q: portfolio's expected return
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A: Calculation: Formula snip:
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57: A security has a development worth of 100,000; its coupon rate is 4% and its yield is needed to be 8%. What might a purchaser pay for this security if the security is expected a long time from now?
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- 22. What is the price of a perpetuity that has a coupon of $50 per year and a yield to maturity of 2.5%? If the yield to maturity doubles, what will happen to its price?The market price of a security is $100 and the expected return is 15%. The risk-free rate is 7% and the market risk premium is 10%. The firm pays a dividend every year. What is the percentage change of the market price today if the correlation of the security return with the market portfolio return doubles?A Treasury bill has a bid yield of 5.44% and an ask yield of 5.29%. The bill matures in 69 days. Assume a face value of $10,000. If you sell it now, how much will you receive?
- What is the price of a five year zero-coupon, default free security with a face value of $1000.Okik Inc. has a beta coefficient of 1.0 and a required rate of return of 12 percent. The market risk premium is currently 8 percent. If the risk free rate increases by 2 percentage points, and Okik Inc. acquires new assets which increase its beta by 50 percent, what will be Okik’s new required rate of return? Give your answer in whole number, disregard the % sign e.g. 25% should be written as 25.you are considering investing in a four year security which pays 6,000 in one year. 6,000 in two years, 6,000 in 3 years and 17,500 in 4 years. the security currently trades at a price of of 18,483.77. What is the yield to maturity of the security? What is duration?
- 29. Which of the following has the greatest interest rate (price) risk?a. A 10-year, $1,000 face value, 10 percent coupon bond with semiannualinterest payments.b. A 10-year, $1,000 face value, 10 percent coupon bond with annualinterest payments.c. A 10-year, $1,000 face value, zero coupon bond.d. A 10-year $100 annuity.e. All of the above have the same price risk since they all mature in 10years.You are considering an investment that will pay you $20,000 in two years and $40,000 in four years. If investors require a return of 11%, what price should it sell for? Question 7 options: 48,681 42,582 40,668 38,344 46,821Suppose that $10,000 of a 6-year fixed-principal Treasury note with a coupon rate of 6.5% is purchased by a dealer firm to create zero-coupon Treasury securities. Let’s assume the appropriate annual yield is 8%. What should be the current value of the zero-coupon Treasury security created from the fifth coupon payment?
- 1. A six-year Eurobond has a 6% coupon and 6% yield. a)What is the modified duration if duration equals 5.20 years? b)What is the dollar duration for this bond if its par value is $1,000? c)What would the duration be if the annual coupon is 6% and the current yield is 10%? d) What the duration of a Eurobond with that matures in five years, has an annual coupon of 6%, and a face value of $1,000? 2. What is the difference between book value accounting and market value accounting? What is duration and how is it useful when it comes to figuring out interest rate sensitivity? What are zero-coupon bonds and what do they allow securities firms and investors to do? What are the characteristics of consol bonds when it comes to duration and maturity?15) a) A pension fund must pay out $1 million next year, $2 million the following year, and then $3 million the year after that. If the discount rate is 8%, what is the duration of this set of payments? b) You own a bond that has a duration of 6 years. Interest rates are currently 7%, but you believe the Fed is about to increase interest rates by 25 basis points. Your predicted price change on this bond is ________. c) You have a 25-year maturity, 10% coupon, 10% yield bond with a duration of 10 years and a convexity of 135.5. If the interest rate were to fall 125 basis points, your predicted new price for the bond (including convexity) is ________.