The price of an Australian Savings Bond (ASB) with no expiration date is originally $1,000 and has a fixed annual interest payment of $150. If the price of the ASB then falls by $100, what will be the interest rate yield to a new buyer of the ASB? Multiple Choice 16.7 percent О 8.4 percent 13.6 percent О 15 percent О 10 percent
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- Determine how much you would be willing to pay for a bond that pays $60 annual interest indefinitely and never matures (i.e., a perpetuity), assuming you require an 8 percent rate of return on this investment. a. $743 b. $1,000 c. $480 d. $750You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? a. $ 957.50 b. $826.31 c. $1,086.15 d. $1,032.20 e. $1,124.62Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $100 in 2020 at the then current interest rate of .22 percent year, how much would the bond be worth in 2028? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2028, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2038. What annual rate of return will you earn over the last 10 years?
- What is the present value of a $1000 future amount received in 17 years if the appropriate discount rate is 11.7% APR? (FYI: This problem computes the value of a 17 year, $1000 zero coupon bond, although it is phrased in time value of money language, rather than bond language.) Answer to 2 decimal points.You have just made an investment for GH¢ 747.25. No payments will be made until the investment matures 5 years from now, at which time it will be redeemed for GH¢ 1,000. What interest rate will you earn on this bond? A) 4.37% B) 6.00% C) 3.559% D) 7.00% E) 4.00%Assume that you wish to purchase a 30-year bond that has a maturity value of P1,000 and a coupon interest rate of 9.5%, paid semiannually. If you require a 6.75% rate of return on this investment, what is the maximum price that you should be willing to pay for this bond? P1,352 P1,450 P675 P1,111
- Finance The practice of investing in a currency that offers the higher return on a covered basis is known as covered interest arbitrage. Currently, the six month Euro Libor rate is -0.52% per annum, and the six month TR libor rate is 18.06% per annum. If the spot rate is 8.5013TRY per Euro and the forward rates are as stated below, Forward Points EURTRY 1M FWD 1003 EURTRY 3M FWD 3411 EURTRY 6M FWD 7096 EURTRY 1Y FWD 14507 a) What is 6M Forward rate for euro? b) Do you have a covered interest arbitrage opportunity? c) If yes, how? d) How much is the arbitrage amount you can enjoy if you can borrow upto 1 million euros or its equivalent Turkish Lira?which one is correct please confirm? Q20: Which investment would show the highest rate of return: 1) a six month (180/360 days) deposit at a rate of 4.75% or 2) a six month straight discount bill at a discount rate of 4.60% (180/360) "A six month deposit is a true yield instrument, therefore the yield will be 4.75%" a six month straight discount bill at a discount rate of 4.60% cannot be determined both are sameYou submit a noncompetitive bid in Dec. 2020 to purchase a 28-day RM1,000 Treasury bill, and you find that you are buying the bond for RM999.88722. What are the: a) discount rate % b) investment rate %?
- Suppose the U.S. Treasury offers to sell you a bond for $2,000. No payments will be made until the bond matures 15 years from now, at which time it will be redeemed for $4,000. What interest rate would you earn if you bought this bond at the offer price?You will receive $100 from a savings bond in 2 years. The nominal interest rate is 8.40%. a. What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the inflation rate over the next few years is expected to be 3.40%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is the real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) d. Calculate the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)]. (Do not round intermediate calculations. Round your answer to 2 decimal places.)What would you pay for a $205,000 debenture bond that matures in 15 years and pays $10,250 a year in interest if you wanted to earn a yield of 2%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
