Question: 11. If you can get an 8% return (annual eective) on a ten year CD from your local bank, would it be wise to invest

11. If you can get an 8% return (annual eective) on a ten year CD from your local bank, would it be wise to invest in a 10 year bond which promises to make a single payment of $1000 at the end of its life? (Assume both are equally risky). This bond costs $475 now and will pay $1000 in ten years. 4 (a) Yes, the bond is better. (b) No, the bond is worse. (c) Cant tell from information given

12. You are given the following information about portfolios of two risky assets, A and B: Weight in A Weight in B Std.dev. of portfolio 0 1 12 0.5 0.5 14 1 0 16 What is the covariance between A and B?

(a) 192%2 (b) 168%2 (c) 224%2 (d) Cannot be determined

13. A rm in a well-functioning capital market has the following projects available. The risk-free rate is 10%. Which should it invest in? NPV IRR X 10 15% Y 0.1 3% Z -5 22% OCC 22% 5% 6% (a) X only (b) Z only (c) X and Y (d) X and Z (e) All three

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

CAN YOU ANSWER THIS QUESITIONS WITH EXPLANTION: 1. A stock is expected to pay a dividend of $10 next year, and this dividend is expected to grow by 5% each year thereafter. What should the price of...

Please help me with all questions on this final! It is due on Friday, July 28. I asked my professor for help on explaining what I did wrong for the midterm which was very similar to this and he told...

All questions are to be answered in a short essay form. Structure your answers around the factual basis. 1. Landlord-tenant relationship is a peculiar one. Please discuss legal aspects of this...

I do not understand anything I am reading. Which of the three valuation techniques (IV b,c,d) is most convincing to you and why? What are AHOLD?s strengths and weaknesses Evaluate the growth...

please I need help Question 1 of 70. An employee purchase discount benefit is: Always a taxable benefit. Generally a taxable benefit Always a nontaxable benefit. Generally a nontaxable benefit. Mark...

1. (a) How much money will you have accumulated in your bank account if you put $3,000 in a CD today that earns 4% interest compounded annually for 10 years? (b) What if you could get semiannual...

PowerPoint Assignment for BUS 401: Principles of Finance You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value...

"Solve the following, show the steps for the final answer. 1. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest...

A four-year 5.8% coupon bond is selling to yield 7%. The bond pays interest annually. One year later, interest rates decrease from 7% to 6.2%. a. What is the price of the four-year 5.8% coupon bond...

i want to fill an 2 * * n x 2 * * n table using trominos colored green blue or red and have only one vacant spot ( x ) each time lets say for G X G G for n = 1 , n = 2 B B R R B G G R R G B B R R B X

Within a continuously competitive global business environment, publicly held companies face constant pressure to generate and report positive financial results. Unfortunately, some leaders may be...

Who do you know that is a member of a microcultural group?

Some people argue that most members of the discussed microcultures are not doing enough to assimilate, take in, absorb, and become a part of U.S. culture. Do you think microcultures should do more to...

As mentioned in Chapter 1, be mindful of your own communicative behaviors. Pay attention and note how your communicative behavior is driven by your level of individualismcollectivism. For example,...