(a) What do certificates and deposits have in common with commercial papers? In what ways are they...
Question:
(a) What do certificates and deposits have in common with commercial papers? In what ways are they different?
(b) Suppose a bond is currently quoted at a price of $1,025. The face value is $1,000 and the coupon rate 3%. The number of days since the last coupon is 49, and the number of days between coupons is 365. If you purchase this bond, what is the actual transaction price?
(c) An investor has preferences over portfolios that can be expressed as a function of expected return (m) and portfolio variance (s2) only: U(m,s2) = m – 0.8 s2. The risk free rate of return is 3% and the average return on the market index is 8%. The standard deviation of the market index is 30%. What is the optimal portfolio for the investor?
Forensic Accounting and Fraud Examination
ISBN: 978-0078136665
2nd edition
Authors: William Hopwood, george young, Jay Leiner