An investment has the following data: Year Ending balance Cash dividend 1 10 2 3 4...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An investment has the following data: Year Ending balance Cash dividend 1 10 2 3 4 5 6 8 5 .20 .30 .30 .20 5 2 0 9 (i) Calculate the cash return (8pts) (ii) Calculate Rate of return (8pts) (2) The following information is available for common stock in Borriston Ltd: Probability Returns -5% 6% 14% 22% (i) Calculate the expected return (6pts) (ii) Calculate the variance (6pts) (iii) Calculate the standard deviation. (6pts) (3) Year Rate of Return 1 20% 2 30% 3 25% 4 15% 5 35% (a) Calculate the average rate of return (4pts) (b) Calculate the geometric rate of return (6pts) (c) What is average rate of return AND geometric rate of return indicating about the investment? (3pts) (4) A bond has a market price of $900 and coupon interest rate of 10% p.a. The bond pays interest semi annually and has a face value of $1,000. Calculate the yield to maturity Rate for the bond. (3pts) (5) A bond has a face value of $1,000 and coupon interest rate of 12% p.a. The bond will mature in 15 years and has a yield to market of 10% p.a. (a) Will the bond sell at a discount or premium? Justify (3pts) (b) Calculate the bond price. (6pts) (6) Lisa invested in a savings account that provides interest of 5% (nominal rate). Using an inflation rate of 3%; calculate the real return that is earned on the savings account. (5pts) An investment has the following data: Year Ending balance Cash dividend 1 10 2 3 4 5 6 8 5 .20 .30 .30 .20 5 2 0 9 (i) Calculate the cash return (8pts) (ii) Calculate Rate of return (8pts) (2) The following information is available for common stock in Borriston Ltd: Probability Returns -5% 6% 14% 22% (i) Calculate the expected return (6pts) (ii) Calculate the variance (6pts) (iii) Calculate the standard deviation. (6pts) (3) Year Rate of Return 1 20% 2 30% 3 25% 4 15% 5 35% (a) Calculate the average rate of return (4pts) (b) Calculate the geometric rate of return (6pts) (c) What is average rate of return AND geometric rate of return indicating about the investment? (3pts) (4) A bond has a market price of $900 and coupon interest rate of 10% p.a. The bond pays interest semi annually and has a face value of $1,000. Calculate the yield to maturity Rate for the bond. (3pts) (5) A bond has a face value of $1,000 and coupon interest rate of 12% p.a. The bond will mature in 15 years and has a yield to market of 10% p.a. (a) Will the bond sell at a discount or premium? Justify (3pts) (b) Calculate the bond price. (6pts) (6) Lisa invested in a savings account that provides interest of 5% (nominal rate). Using an inflation rate of 3%; calculate the real return that is earned on the savings account. (5pts)
Expert Answer:
Answer rating: 100% (QA)
Here are the solutions i Cash return Total cash received Initial investment 5 3 8 9 4 10 29 10 29 So ... View the full answer
Related Book For
Probability And Statistics For Engineering And The Sciences
ISBN: 9781305251809
9th Edition
Authors: Jay L. Devore
Posted Date:
Students also viewed these finance questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1 and 2. On September 1, Irene opened a retail store that specializes in sports car...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-4. Ivan and Irene paid the following in 2012 (all by check or can otherwise be...
-
In which control account would you expect to find a provision for doubtful debts?
-
(a) Estimate the power output of sound from a person speaking in normal conversation. Use Table 12-2. Assume the sound spreads roughly uniformly over a sphere centered on the mouth. (b) How many...
-
One pound mass of ammonia (NH3) is contained in a linear spring-loaded piston/cylinder as saturated liquid at 0 F. Heat is added from a reservoir at 225 F until a final condition of 125 lbf/in 2, 160...
-
Pomona Corporation issued 60,000 shares of \(\$ 3\) par value common stock at \(\$ 21\) per share and 9,000 shares of \(\$ 30\) par value, ten percent preferred stock at \(\$ 85\) per share. Later,...
-
Explain the theory behind the residual income valuation approach. Why is residual income value-relevant to common equity shareholders?
-
Ronald started his new job as a controller with Aerosystems today. Carole, the employee benefits clerk, gave Ronald a packet that contained information on the company's health insurance options....
-
What characteristics of a property, plant, and equipment item make it different from other assets, such as accounts receivable or inventory?
-
Academically, we tend to think that the best negotiation strategies aim for a win-win scenario. But practically thinking, that is not always the case. For example, few people buying used cars want to...
-
The Podrasky Corporation is considering a $225 million expansion (capital expenditure) program next year. The company currently has $400 million in net fixed assets on its books. Next year, the...
-
Provide An example of using Emotional Intelligence
-
1 . Explain one advantage and one disadvantage of using a more participative ( bottom up ) approach to budgeting.
-
On October 1 5 , the school agreed to teach a four - month class for an individual for $ 1 , 2 5 0 tuition per month payable at the end of the class. The services to date have been provided as...
-
On January 3 0 , 2 0 X 4 , JPD Inc. purchased a bond at par. The bond has a face value of $ 5 0 0 , 0 0 0 , a stated rate of 8 % and a term of 3 years. The bond pays interest semi - annually on March...
-
Jia Inc. applies ASPE and had the following statement of financial position at the end of operations for 2013: Cash JIA INC. Statement of Financial Position December 31, 2013 $ 20,000 Accounts...
-
Find the equation of the plane passing through the points P 5,4,3 ,Q 4,3,1 and R 1,5,4
-
After all students have left the classroom, a statistics professor notices that four copies of the text were left under desks. At the beginning of the next lecture, the professor distributes the four...
-
An airport limousine can accommodate up to four passengers on any one trip. The company will accept a maximum of six reservations for a trip, and a passenger must have a reservation. From previous...
-
a. For f(x1, x2, x3) as given in Example 5.10, compute the joint marginal density function of X1 and X3 alone (by integrating over x2). b. What is the probability that rocks of types 1 and 3 together...
-
Refer to the data given for the Lowe Company in Problem P12-2B. Required a. Compute the change in cash that occurred during 2019. b. Prepare a statement of cash flows using the direct method. Problem...
-
Refer to the data given for the Madison Company in Problem P12-3B. Required a. Compute the change in cash that occurred during 2019. b. Prepare a statement of cash flows using the direct method. Use...
-
The financial statements for the Columbia Sportswear Company can be found in Appendix A at the end of this book. Required Answer the following questions: a. How much did Columbia Sportswear's cash...
Study smarter with the SolutionInn App