We promise to pay you $2000 at the end of each of the next 5 years. If
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Question:
2-Assuming an average annual inflation rate of 2% over the next 10 years, what will be your average annual real return associated with an investment offering an average annual return of 4.9968%?
3-A new standard bond with a face value of $1000 and a price of $1128.65 has a coupon rate of 7% and a required annual rate of return of 6% (compounded semi-annually).
What is its deadline?
4-How many quarters does it take to triple the value of an investment, if the interest rate is 3% per semester?
5-A common stock is expected to pay a $0 dividend in one semester, then a $2 dividend in a year, then a $2.20 dividend in three semesters, then a $2.40 dividend in two years, then a dividend of $2.6 at the end of each of the following semesters over an infinite number of periods. What is its theoretical value if the required rate of return is 5% per semester?
6- You are promised $4,000 in 3 years. If you estimate that you can get an interest rate of 7% per year for the next 3 years, how much are you willing to exchange this promise for?
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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