Question 1 :- (a) What is meant by an amortizing security? (b) What are the three components of the cash flow for an amortizing security? (c) What is meant by a cash flow yield? (Please solve all three parts)
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Question 1 :-
(a) What is meant by an amortizing security?
(b) What are the three components of the cash flow for an amortizing security?
(c) What is meant by a cash flow yield?
(Please solve all three parts)
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- 1. A man borrows P2,000.00 from his friend on October 1, 2001 and promises to pay the principal and exact simple interest at 5% to discharge the debt on June 28, 2002 a. How many days will be charged with interest? b. How much does the man pay back his friend? 2. Find the present value of P2,000.00 due at the end of 8 months if the discount rate is 6%.31. An analyst is considering the purchase of a Government of Canada bond that will pay its face value of $10 000 in one year's time, but pay no direct interest. The market interest rate is 4% and the bond is being offered for sale at a price of $9400. The analyst should recommend purchasing the bond because the purchase price is more than its present value and is therefore profitable. not purchasing the bond because the buyer could earn an additional $376 by investing the $9400 elsewhere. not purchasing the bond because the purchase price is less than its present value. purchasing the bond because the purchase price is less than its present value and is therefore profitable. not purchasing the bond because the buyer could earn an additional $224 by investing the $9400 elsewhere.A coupon bond has two years to maturity, a face value of $1000 and a coupon rate of 2%. The yield to maturity is 3%. After one year, the yield to maturity falls to 2%. Find the rate of capital gain for the first year.
- 6) You purchased an annual interest coupon bond one year ago that had nine years remaining to maturity at that time. The coupon interest rate was 10%, and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been A) 8.00%. B) 7.82%. C) 7.00%. D) 11.95%. E) None of the options are correct. Provide an accurate answer with justification.48. An annual interest payment divided by current price of bond is considered as. i am not satisfy give downvote A. current yield B. maturity yield C. return yield D. earning yieldUse the following table to compute the price of the four bonds: Face Value Maturity (years) Yield Frequency of yield Coupon rate Frequency of coupon Bond 1 £100 3 5% annual 6% annual Bond 2 £1000 4 3% quarterly 4% semi-annual Bond 3 £100 2 2% monthly 3% quarterly Bond 4 £100 5 3% monthly 4% semi-annual
- A four-year bond has an 6 percent coupon rate and a face value of $1,000 . If the bond's current price is $817.75 , calculate the yield to maturity of the bond (assuming annual interest payments). A) 8 percent B) 10 percent C) 12 percent D) 6 percentWhat is the present value of $1.21 received at the end of two years if the interest rate is 10% and compounding is annual? a- 1.31 b- 1.21 c- 1.10 d- 1.00 Which of the following is a leading economic indicator? a- average prime interest rate charged by banks b- stock prices, 500 common stocks c- commercial and industrial loans outstanding d- industrial productionA five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond’s price? b) What is the bond’s duration? c) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield. d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).
- 28)You recently obtained a $135,000, 30-year mortgage with a nominal interest rate of 7.25 percent. Assume that payments are made at the end of each month. What portion of the total payments made during the fourth year will go towards the repayment of principal?A bank is negotiating a loan. The loan can either be paid off as a lump sum of $100,000 at the end of four years, or as equal annual payments at the end of each of the next four years. If the interest rate on the loan is 10%, what annual payments should be made so that both forms of payment are equivalent?6. What lump sum of money must be deposited into a bank account at the present time so that $5,000 per year can be withdrawn for 12 years, with the first withdrawal scheduled for 6 years from today? The interest rate is 8% per year. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
