Assume that the real risk free rate is 3% and the average annual expected inflation rate is 5%. The DRP and LP for Bond A are each 1% and the applicable MRP is 2%. What is bond A’s interest rate?

Q: Suppose that the accumulated value of $1000 at the end of two years: Given that: a) the nominal annu...

A: Principal (P) = $1000 n = 2 years = 8 quarters

Q: Violet Inc. bonds currently sell for P1,500 and the same bond was originally sold at P1,500. This in...

A: Current price = P1500 Original price = P1500 Annual coupon payment = P37.50 Period = 5 Years

Q: 1. Provide a Liquidity Ratio Analysis based on the current Ratio. 2. Provide a Profitability ratio ...

A: Ratio Analysis is the analysis of the financial statements of the company which determines the profi...

Q: Today, $1 = 1.82 Euro and $1 = 130 Korean Won. In the 90-day forward market, $1 = 1.84 Euro and $1 =...

A: Acorxding to interest rate parity theory, the currency of a country which has higher interest rate w...

Q: James deposits $1000 at the end of each quarter for 10 years, in an account paying 18 % compounded q...

A: Quarterly deposit (P) = $1000 Period = 10 Years Quarterly period (n) = 10*4 = 40 Interest rate = 18%...

Q: 11. Valuing Preferred Stock E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. ...

A: Annual dividend (D) = $20 First dividend payment period (n) = 20 years Required rate of return (r) =...

Q: er to accumulate ₱100,000 in 3 years and 6 months, how should one invest today at 9% compounded semi...

A: The today value which is equivalent to the future payment includes payment without  interest that wa...

Q: Assume the marginal corporate tax rate is 28%. The firm has no debt in its capital structure. It is ...

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A: According to residual dividend policy, dividend is paid when amount left after set aside the amount ...

Q: Which of the following comes closest to the net present value (NPV) of a project whose initial inves...

A: Initial investment = $5 Cash flow at the end of year 2 (CF2) = $3 Cash flow at the end of year 4 (CF...

Q: An indium-gallium-arsenide-nitrogen alloy developed at Sandia National Laboratory is said to have po...

A: Rate of return- the rate that will make present value of all extra revenue equal to investment.   Da...

Q: y this case and answer question asked below: Spot USD / JPY 116.00 3Months DOLLAR Deposit Rate...

A: A forward rate agreement  is a contractual relationship that establishes a future interest rate in e...

Q: A car loan of $28,641.62 is to be repaid with end-of-month payments of $582.15. If interest is 4% co...

A: EMI stands for equated monthly instalments. It is a series of payment provided by the borrower to a ...

Q: Bulldogs Inc. forecasted the following data for 2022. ·      Forecasted unit sales is 20,000. ·    ...

A: Given: Particulars Amount Sales units 20000 Selling price 25 Contribution margin ratio 40% ...

Q: A certain machinery costs P 50,000 lasts 12 years with a salvage value of P 5,000.  If the owner dec...

A: Depreciation is the allocation of cost of asset over the useful period of life. Under double declini...

Q: 17. Capital Company has decided to discontinue a product produced on a machine purchased 4 years ago...

A: Cost relevant to the decision to produce the new product includes all the expenditures that are nece...

Q: A mortgage of $176,000 is to be repaid by making payments of $1010 at the end of each month. If inte...

A: A mortgage is defined as the kind of loan given to someone in exchange for something valuable. The f...

Q: 1.A construction company agreed to lease payments of $536.13 on construction equipment to be made at...

A: Note: This question has two questions. The first has multiple subparts. The first three subparts in ...

Q: A firm's equity beta is 1.2 and its debt is risk free. Given a 0.7 debt to equity ratio, what is the...

A: Asset beta shows how the company is uses its sources of financing with respect to risk and weight. T...

Q: The role that a trader plays and the importance of the function to the financial markets

A: "The role that a trader plays and the importance of the function to the financial markets" In order ...

Q: Find the numerical value of the following factors (P/A, 2.5%,10) = (F/A, 1%,45) = (A/P, 5%,2) = (A/F...

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first...

Q: Question 17 Issuing stock rather than increasing debt: O all of the other answers O reduces financia...

A: As per Bartleby Honor Code, when multiple questions are asked, the expert is required only to solve ...

Q: Tettletale News Corp has been growing at a rate of 10% per year, and you expect this growth rate in ...

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Q: Little Lemon Co. is identifying the value of its equity using the enterprise valueapproach as they h...

A: Calculation of nominal risk-free rate : Nominal risk-free rate = 1+Real risk free rate×1+Inflation p...

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Q: Consider two firms – Alpha Co. and Omega Co. – that operate in the manufacturing of mountain bikes a...

A: Degree of operating Income (DOL ) helps in identifying and quantifying the Operational risk of the c...

Q: 1. Company S and Company T combine to form a new Company ST by pooling all their assets and liabilit...

A: Solution:- When two seperate entities pool their resources together and distribute their new shares ...

Q: 10. Growth Rates The stock price of Alps Co. is $67. Investors require a return of 10.5 percent on s...

A: The growth rate of the dividend can be calculated as per the dividend discount model

Q: Annual Percentage Rate 10%     Compunding periods per year 12             Effective Annual Rate

A: As per Bartleby honor code, if multiple questions are asked, the expert is required only to solve th...

Q: The rate charged for issue of foreign currency notes for travelling abroad to the customer.

A: The rates mentioned in each case are selling and buying rates for the market maker or the commercial...

Q: has issued 10-year bonds, with a face value of $1,000,000, in $1,000 units. Interest at 8% is paid q...

A: The price of bond is present value of coupon payment and present value of par value of bond to be re...

Q: What deposit made at the beginning of each month will accumulate to $120,000 at 5% compounded semi-a...

A: Present Value:  The present value is the value of cash flow stream or the fixed lump sum amount at t...

Q: To purchase a specialty guitar for his band, for the last three years JJ Morrison has made payments ...

A: Monthly saving is $92 Time period is 3 years Interest rate is 4.87% compounded monthly Interest rate...

Q: Outline the circumstances in which voluntary and involuntary liquidation may occur

A: Solution:- Liquidation means shutting down the business or ceasing the operations of an entity. It c...

Q: a parent on the day of the child is born wishes to detrmine what lump sum would have to be paid into...

A: An annuity is a contract between you and an insurance company in which you make a lump-sum payment o...

Q: The importance of international financial institutions for the growth of the economy around the worl...

A: Statement Given "The importance of international financial institutions for the growth of the econom...

Q: A renewable energy industry is one of the promising sectors in future and play a major role in the v...

A: Future value of a present value is the value of that amount after taking into account the time value...

Q: A construction company agreed to lease payments of $481.44 on construction equipment to be made at t...

A: a) Original lease payment PNT=$481.44 (Quarterly) n= 5*4= 20 Months i= 7/4= 1.75%= 0.0175  PVn= PNT1...

Q: thomas is planing to withdraw $6000 from savings account at the end of each quarter for five years. ...

A: Interest rate Is 5.38% Compounded Semi annually Amount of Witdrawal is $6,000 Time period of with wi...

Q: 13. The following information relates to two companies   Alpha plc Beta plc Profit after tax £2...

A: Business valuation is used to find out what economic value the owner gets from investing in the said...

Q: Find the term of the following ordinary general annuity. State your answer in years and months (from...

A: Future value of annuity = $18500 Annual payment (A) = $770 Compounding period is quarterly. Hence,  ...

Q: An earth moving equipment has a first cost of P 25,000, estimated life of 6 years, with no salvage v...

A: In Sinking fund method, the depreciation of the asset is calculated to accumulate the amount of mone...

Q: You are ready to make a new car purchase and the manufacturer is offering a 60-month, zero percent i...

A: Given: Period 60 months Interest rate = 0% Cash rebate = $1,500 Price of the car = $25,000

Q: Required: a. How much should he pay today for the investment? b. How much should he pay if the inves...

A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...

Q: Evaluate the two strategies adopted by financial institution to manage their risks.

A: Note: As you asked to provide the solution of part iii), we are providing the solution of part iii) ...

Q: he price of the product Alfa is now 100 and it is expected to grow nominally by 6%, which is more th...

A: Nominal growth rate of price can be defined as the rate of growth of a product in in the current pri...

Q: The rate of return on U.S. T-bills is 3.25% and the expected return on the market is 9.50%. J&X, Inc...

A: Systematic risk is the risk of the market volatility,  Systematic risk affects entire  market not ju...

Q: The firm uses measures from its financial statements to improve shareholder value. What element in t...

A: Managers engage in transactions in order to boost the firm's worth. Of fact, the value of a company ...

Q: Why is risk incorporated into capital budgeting and how is it incorporated into the process of evalu...

A: Risk is incorporated into capital budgeting  Risk is inevitable to these investments. The various ri...

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.