Finance Questions and Answers September 11, 2021

Suppose a 4year, 1,000 bond with a 11.86 coupon rate and annual coupons is trading with a yield to maturity of 9.87. a. Is this bond currently trading at a discount, at par, or at a premuim Explain. b. If the yield to maturity of the bond rises to 10.41 (with annual coupons), at what price will the bond trade a. Is this bond currently trading at a

Kayla is expected to settle a loan on February 14th, 2018 by paying 4,000. What amount should he pay if he decides to settle it on April 1st, 2017 instead The interest rate is 2.41 compounded semiannually. 3,916.87 Round to the nearest cent D

Your rich aunt has promised to give your 7700 in 3 years. How much should you be willing to receive today (in lieu of the 7700 in 3 years) if you can earn 7 per annum, compounded semiannually (Round to nearest penny, e.g. 1234.56) Answer,Sam I Am invests 156,000 today at 11 per annum, compounded quarterly. What will the balance of Sams investment

A portfolio is currently valued at $100m, and you wish to purchase put options on the portfolio to eliminate the possibility that the value goes below $100m in 6 months time while at the same time retain as much as possible of the up-side risk. The risk free interest rate is 3% per year, a 6-month call option is worth $16.48 per $100 worth of the

11. A. You are an American who invested 40,000 in euro bonds when the exchange rate was 1.30 . Over the one year you held the bonds, they earned 8 interest. What is the amount in US dollars that you will receive if you convert your bonds (including interest) when the exchange rate is 1.18 4,0,000 x1, 30 52000 52000 x 1,08 56160 56160 1,18

7. You invested 20,000 dollars in Japanese bonds when the exchange rate was 95S. Over the one year you held them, the bonds earned 5 interest. What is the amount in US dollars that you will receive if you convert your bonds (including interest) and the exchange rate is 90 8. What is your ROI in pbm 7 og zavou,9. What would your investment in pbm 7

Manheart has developed a project that requires an immediate investment of $300. The project's long-term cash flows are $70 for 7 consecutive years beginning in one year. If the project has a required rate of return of 9%, what is the project's NPV. Project NPV: $ Place your answer in dollars and cents. Do NOT include a dollar sign or a comma in

An investor today buys two bonds, A and B, that have the same characteristics except for their durations. Bond A has a life of 3 years, while B has a life of 20 years. Both securities are purchased at their nominal value (that is, at par) which is 1000 euros. The issue rate of both securities is 7%, and the coupons are paid once a year. So, both

How would a hospital go about qualifying as a Disproportionate Share Hospital (DSH)? Does this designation benefit the hospital? Why or why not? Does this designation benefit the community? Why or why not?

You just graduated from UW and it happens to be your 22nd birthday today. It's time for a big party. But, knowing that you can make your money work for you using TVM, you decide that instead of partying big now, you're going to take a trip around the world when you turn 35. At that time, the trip will cost you $28,000. How much would you need to

A. Explain what is delta for an option? By considering the Black-Scholes formula for a non-dividend-paying stock, write down the formula for delta of a European call. (b) What is the trader's interpretation of delta? (c) For a stock trading near $45.00, the delta of a European call would look similar to those in Figure 1. What patterns about delta

DELTA IV 25 IV 54 IV 85 35.00 1 0.9983 0.9692 37.50 1 0.9802 0.9113 40.00 0.9981 0.9075 0.8109 42.50 0.9042 0.7363 0.6729 45.00 0.4641 0.4974 0.5149 47.50 0.0777 0.2712 0.3614 50.00 0.0027 0.116 0.2371 52.50 0 0.0366 0.1448 55.00 0 0.0097 0.0799 Figure 1 The first column indicates the strike prices. IV 25, IV 54, IV 85 stand for implied

You are offered a court settlement in the following terms: you will receive 4 equal payments of $7,958 each every year, with the first payment being made 3 years from now. The current annual interest rate is 4%. Assume yearly compounding. What is this settlement worth in present value terms?

A firm wishes to issue new shares of its stock, which already trades in the market. The current stock price is $33, the most recent dividend was $3 per share, and the dividend is expected to grow at a rate of 4% forever. Flotation costs for this issue are expected to be 14%. What is the required rate of return (or financing cost) in this new issue?

You are managing a separate portfolio dedicated to your retirement income. You do not wish to take excessive risk, and would prefer to limit the downside. What common option structure would suffice and how would you implement this structure to protect the portfolio's value? A bullish call spread is bullish on direction. Is it also bullish on

A stock that pays no dividends is worth So = 50 euros today. The risk-free interest rate with continuous compounding is 3% for the maturity T = 2 months. Assume that, in two months, the stock can take one of the two values Sou = 53 euros or Sod = 48 euros. Calculate the price of a European put on the stock with maturity T and exercise price K= 51

SuperGrowth is a relatively young tech company. It is going through a period of high growth and has thus decided not to pay any dividends until the end of year 6. At the end of year 6 it will pay a dividend of $2. This dividend will grow at a rate of 25% for the next 4 years. After that SuperGrowth pledges to maintain a constant 5% growth rate in

Tyler plans to start investing for retirement at age 25. He estimates that he can contribute $10,000 as initial capital, compound annually at 8% for 45 years (till he is 70 to claim maximum social security benefits). Bryan plans to start investing for retirement at age 35. He estimates that he can contribute $20,000 as initial capital, compound

A business borrower applies for a 2 million loan from the bank for 4 years. The loan rate is 8%, and the loan has various fees of 0.5%. The spread rate of the loan is 0.021 and the discount rate(R/(1+RL) is 150 basis points. The expected loss rate of this lending is 1.5%. What is the RAROC of this loan, given 25% as the tax rate of the bank?

Mr. Smith, CFA, is an investor. He has a $1,700,000 fully diversified portfolio. He is considering to add his investments as much as $300,000 in Stock A. The correlation coefficient between Stock A and his fully diversified portfolio is 0.30. The expected monthly returns are 0.50% (his fully diversified portfolio) and 0.90% (Stock A). The standard

Assume that the two shares, Share A and Share B, are the only risk-bearing assets available to investors. Assume further that there is a bank that offers an interest rate of 1.51% on invested capital (risk-free) and a lending rate of 4.51%. Share A has an expected return of 13% and a standard deviation of 29.26% and Share B has an expected return

Amy, 55, owns a $840,000 superannuation interest in a lump sum. The interest is split into two parts: a tax-free portion of $168,000 and a taxable element of $672,000. If her marriage falls apart, she and her husband Con will split the cash 50/50. NimiConsh, who is 58 years old and has been retired for a long time, wants to cash in his

You are holding a traditional 60-40 portfolio in stocks and bonds for the last five years. Specifically, you have been holding the ASX200 index portfolio and the aggregate Australian bond portfolio. The index levels to these two asset classes are tabulated in Spreadsheet named 'FIN30020 Index or Price for various asset classes'. After learning

Average daily return Daily standard deviation Annualised return Annualised standard deviation Correlations SP ASX200 SP Aus Aggregate Bond SP 500 SP ASX AREIT 100 BTCUSD Gold AUDUSD SP ASX200 SP Aus Aggregate Bond SP 500 SP ASX AREIT 100 BTCUSD Gold AUDUSD 0.02 0.31 0.05 0.01 0.02 0.02 0.06 1.06 0.21 1.21 1.45 5.03 112.60 12.39 5.90 4.42 3.92 0.93

Consider a company that has funding of 40% debt, 50% ordinary shares and 10% preference shares, a cost of debt (before tax) of 2%, a cost of ordinary shares of 7%, a cost of preference shares of 8% and a tax rate of 30%. (a) Calculate the weighted average cost of capital (WACC) for this company. (b) State the two conditions under which you could

Gaudi Ltd is a local Australian company. Gaudi Ltd is considering a new project with a different risk profile to its main operations. That is, the new project has a higher level of risk than their existing projects. The project involves purchasing new equipment from a Japanese supplier. The purchase contract for the new equipment requires two

Eva is going to invest in an account paying an interest rate of 6.5% compounded annually. How much would Eva need to invest, to the nearest cent, for the value of the account to reach $41,000 in 13 years?

What are the main credit risk exposures (borrower types, country, region, etc.) of MUFG and JPMorgan Chase Bank? What credit risks does it prioritize? Do these credit risks work independently or together, i.e., what is the default correlation across the borrowers? What modelling processes (Credit VaR, etc.) is the bank using and what data does it

You have access to a 12month AUDCAD swap contract and bank loan markets in Australia and Canada. Use the information provided below and suggest a portfolio to lock any arbitrage opportunities. 12month Forex swap Spot rate 0.74 AUDCAD 12month forward rate 0.70 AUDCAD Bank Rates Australia Canada p.a. 2.50 2.80 3.00 3.40 Show all your work, explain

Mondelez, a US food and beverage company, is expected to receive CHF1,500,000 in 3 months' time for foodservice products from Nestle in Switzerland. The following information is available: Spot exchange rate USD0.98/CHF 3-month forward exchange rate USD1.07/CHF USD interest rate 1.75% p.a. CHF interest rate 1.25% p.a. There are call and put

Recently, high inflation has been making headlines around the world. Based on the materials covered in BFC5935, explain why Inflation risk can be of great concern for the central bank and investors. What action(s) do we expect the central bank, as well as investors, to take if high inflation is expected?

Suppose that an investor buys a 180day Australian bank bill with quoted yield 4.2 and sells the bill after 30 days when the quoted yield is 4.2 (on a 150day bill). What is the holding period yield on the bill expressed as a continuously compounded rate 3 marks (ii) A company has cashflows C, C and C3 which are to be paid in one, two and three

An American car manufacturer called Agnelli Inc. produces and sells variants of the Nuova 500 all over the world. In addition to selling various variants of this car, Agnelli Inc. also has a range of factories in a range of countries. Given strong consolidation efforts in the car industry to benefit from economies of scale, Agnelli Inc. is seeking

The Bank has invited a guest, who gives a seminar on Bayesian Econo metrics. Intrigued by the topic, your boss asks you about the possibility of estimating with Bayesian methods the same factor model that you have used to forecast GDP. From an inferential statistics point of view, what is the main dif ference between the classical and the Bayesian

Mary has $26,000 in her TFSA after she withdrew $109,000 a month ago for the down payment on her condo. She has $12,000 unused TFSA room. If new TFSA room in January is $6,000, how much is she allowed to contribute to her TFSA next January without penalties?

Currently, Musk holds 15% of the stocks in Twitter. The board of the company decided to activate a poison pill. According to the poison pill provisions, the company will have a 2:1 rights issue (that is for every old share you can buy two new shares) except for Elon Musk, with a subscription price of $20. Assume Musk decided to buy another 1% of

An Australian company encounters a credit event, triggering various CDS contracts. It has two series of senior bonds outstanding Bond A trades at 40 of par, and Bond B trades at 50 at par. Investor X owns AUD20 million of Bond A and owns AUD20 million of CDS protection. Investor Y owns AUD20 million of Bond B and owns AUD20 million of CDS

A recent (16 March 2022) Bloomberg news report describes a 60/40 fund (i.e, a fund with 60% allocated to equities and 40% allocated to bonds) as "one of the most conservative approaches" to asset allocation in portfolios. Required a) Are bond prices and stock prices positively or negatively correlated? If so, why? If not, why not? b) Another

Daniel Cahill successfully got his credit application approved last month by the Commonwealth Bank of Australia for a loan of 60,000. The bank requires him to bear an interest rate of 3.0 per annum and make monthly principal and interest payments over the next five years. He already made his first repayment last month, and the following is due by

A firm's return on equity is 6.55%, its plowback ratio is 70%, and next year's expected earnings per share is $4.30. What is the expected price of the stock in 6 years if investors require a 10.70% rate of return?

An analyst has valued an investment today, at $25,000. The investment pays $ X one year from now, $X two years from now, nothing at t=3, and $ 2X on t=4. This pattern will continue in perpetuity (i.e, $ X on t=5, $ X on t=6, nothing at t=7,and $ 2X on t=8; etc.). If the effective annual rate that she has used is 10%, what is your estimate of X?

Heidi owns 660 shares of Boyd Enterprises, which is priced at 65.30 per share. The company plans a 6for1 stock split. How many shares will Heidi own and what will the share price be after the stock split

The Outlet Mall has a cost of equity of 14.16 percent, a pretax cost of debt of 7.42 percent, and a return on assets of 12.24 percent. Ignore taxes. What is the debtequity ratio Report as a decimal (e.g. debttoequity ratio of 0.5 would be 0.5 and not 50)

Mass Co. has a beta of 1.10. The firm currently has 30% debt, but is considering changing its capital structure to be 20% debt and 80% equity. If its corporate tax rate is 40%, what is its levered beta at 20% debt level? Hint: First calculate unlevered beta using old capital structure and then calculate levered beta using the new capital structure.

Newcrest expects to produce 4,800 ounces of gold next year, with production costs of $769 per ounce. Depending upon the economic conditions over the next year, Newcrest expects the price of gold next year to be either $1,595, $1,778, or $1,863 per ounce, with each outcome being equally likely. Newcrest expects to sell all of its copper at the

You have a portfolio that is equally invested in Stock F with a beta of 1.12, Stock G with a beta of 1.49, and the riskfree asset. What is the beta of your portfolio

The following confusion matrix for a classification method with Class 0 and Class I was found by Data Mining Confusion Matrix Actual Class 0 Predicted Class 0 105 34 1 55 110 What are the percent error rates for Class 0 and Class 1

A sweaters regular price is $49.99. Today it is on sale for 25% off. If the sales tax is 6%, how much would you pay for the sweater today?

A company sells each unit of its product for $80. Its variable cost per unit is $40 and the total fixed cost is $300000. If the company sells 22000 items, what will be the revenue?

Today is Aug 15 and IBM stock is trading at $50. David formulates a trading strategy using IBM stock options that expire in October. He writes two options on IBM stock: one is OCT 60 call option priced at $2.00, the other is OCT 40 put option priced at $1.50. He buys two options on IBM stock: one is OCT 50 put option priced at $2.80, the other is

Consider the following three investors, and all investors hold CP (1) Series A 6M APP or converts to 10M shares. (2) Series B 12M APP or converts to 10M shares. (3) Series C 10M APP or converts to 10M shares. In addition to these investors, the founders hold 10M shares of common stock. Fill in the Table with the amount the founder and each

You observed following prices for options on ZM stock: $2.50 for a call and $3.00 for a put. Both options have an exercise price of $50 and will expire in 6 months. The interest rate on t-bills is 2.9% per annum. The stock of ZM is currently trading at $50 with a standard deviation of 25% per year. ZM does not pay any dividends. Are there any

Jack received 1,000 shares of IBM stock from his parents before Christmas. Today is Dec.26 and the stock is selling for $50 a share. The March call options on IBM shares with strike price $55 are currently selling for $5 each. The March put options on IBM stocks with strike price $45 sell for $2 each. While holding IBM shares, Jack writes 10

The Stock markets is often used most often as a catchall term to denote both the primary market and the secondary market for trading in equities. Required a) b) Describe and discuss the primary market for trading in equities (8 marks) Describe the two (2) basic types of trading which occurs in the secondary market (12 marks) for equities

Use the following interest rate data to answer the question(s) below. Treasury bills Treasury bills Treasury notes Treasury notes Commercial paper 90day 180day 2year 3year 90day 3year 3year Expected 2year inflation rate Reference Ref 61 With reference to the data above, what is the default risk premium on 3year AArated corporate bonds Corporate

The spot USDMAD is 9.39 (One USD is for 9.39 MADs). In 10 months, it will either rise to 10.36 or fall to 8.34. The riskfree rate on the MAD is 6.3 and the riskfree rate on the Euro is 6.76. i) A call to buy one dollar at 9.35 MADs expires in 10 months. What should its price be (7.5 pts) Answer i) A put to sell one dollar at 10.66 MADS expires in

The bond issued by the RDR company has a coupon payment of 3 that is paid on annual basis. The bonds maturity period is 29 years and the bonds yield to maturity is 6. An investor buys this bond for 200 and also holds it for 1 year. what will be the return earned by this investor if the yield to maturity of the bond at the yearend is 6. The bonds

An analyst produces the following joint probability function for a foreign index (fi) and a domestic index (di). Rfi25 Rfi15 Rfi10 Rdi30 0.25 0 0 Rdi25 0 0.5 0 Rdi15 0 0 0.25 Calculate the covariance. Give your answer rounded to two decimal places, so in the format XX.XX.

You want to invest in bonds and want to make sure that you are protected against changes in interest rates. You have the following information Bond Z 5.110006 29 3.319409 3.319409 Suppose you have a holding of 10 years. All coupon rates and yields are annualized rates, and the coupons are paid semiannually. Coupon Years to Bond Y 4.159310 maturity

Solve the following

Activities (Cost Element) Initial Cost (RM) Yearly Power Consumption Cost (RM) Annual maintenance cost (RM) Annual Operational Cost (RM) Expected resale value at the endoflife span (RM) Organisations average Return on Investment Bank Negara Base Lending Rate (BLR) Expected life span Transformer X 780,000 25,000 12,000 20,000 78,000 Transformer Y

The current market price of a bond is $105 prr $100 nominal value. the coupon rate on the debt is 6% and the debt can be redeemed at par in 3 years time. alternnatively the debt can be converted into 10 shares per $100 bond. the currnet market price of the share is $7.50 and share price is expected to increase 8% per annum. what is the redemption

Marco and Sophie are legally married and currently on separation. They both, unknowingly, insured the family property for P400 000.00 and P600 000.00 respectively. Both policies are still live and a covered loss of P180 000.00 has occurred. Required Determine how their insurance policies will contribute to the loss using Pro rata basis

washers plc trades in bathroom taps, the annual demand is 25,000; the cost of placing an order with the supplier is 54; the annual cost of storing each hnit is 1.80. use tge economic order quantity mode to determine how many units should be ordered each time an order is placed. show your work.

A company has a lower cash limit of 20,000. the cost of buying and selling short term investment is 70 per transaction. the daily cash flow variance is 2.5 million and the daily interest rate is 0.05%(0.0005 as decimal). what is the spread between upper and lower limits? show your work.

The following financial data is available for DEF plc. ('000) revenue 15,520 profit after tax 4600 PBIT 6300 current assets 1030 current liabilities 955 long term liabilities 5600 equity plus reserves 18450 DEF plans to raise 2 million in finance by issuing 8% debentures,. what would the new financial gearing be after the issue? using

The following financial data is available for DEF plc('000) Revenue 15520 PBIT 6300 Profit after tax 4600 current assets 1030 current liabilities 955 long term liabilities 5600 equity plus reserves 18450 calculate the return on capital employed. show your work.

An analyst has valued an investment today, at 25,000. The investment pays X one year from now, X two years from now, nothing at t3, and 2X on t4. This pattern will continue in perpetuity (i.e, X on t5, S X on t6, nothing at t7, and 2X on t8 etc.). If the effective annual rate that she has used is 10, what is your estimate of X

GENCO issues 3.0% 10-YR annual coupon bonds to yield 3.2%. The bonds are callable at 101 in two years. What is the issue price of the bonds? 2. What is the yield to call?

One year ago, your friend purchased 82shares of PantherCo. stock for 2,165.98. The stock does not pay any regular dividends but it did pay a special dividend of 0.51 a share last week. This morning, she sold her shares for 30.97 a share. What was the total percentage return on this investment Answer as a percentage (e.g. 0.01 is 1.0 ) but without

A 4.35% coupon bond is priced at 99.68. The last semi-annual coupon payment was made on June 3, 2019. The next coupon will be paid on December 1, 2019. What is the invoice price on July 6, 2019?

A firm pays a current dividend of $1.50 per share. The dividend is expected to grow 4.50% per year in perpetuity. The firm's current stock price is $98.56 per share. What is the investor's required rate of return?

Consider a pure discount bond with 10 years remaining to maturity selling for 61.39133 per 100 of face value. If the bonds yield remains constant over the next three years what price will the bond be selling for with 9, 8, and 7 years remaining to maturity How high would the yield have to rise in order that, with 6 years remaining to maturity, the

Calculate the forward rate

Maturity (years) 0.5 1 1.5 2 Coupon YTM 0 0 3.8839 4.2452 4.4921 Price 96.7491 94.3235 99.4176 Given the above information, calculate the 6 month forward rate (annualized) that is expected in 1 year. Assume a face value of 100 (round your answer to 6 decimals and present your answer in decimals, for example 0.5 not 50)

Consider the following (Rx Rf) 0.027639 0.888881 (Rm Rf) ex OM 0.06157030 Rf 0.021258, Rm 0.096539, Rx 0.536200 What is the variance of stock X. (Round to 6 decimals).

You have the following information Rx Rf 0.028097 0.537420 (Rm Rf) ex. OM 0.58453520 Rm 0.026841 Rf 0.027232 (ex) 0.37107390 What is the predicted excess return of stock X (round to 6 decimal places and present your answer in decimals for example 0.05 not 5) Your Answer

You want to find the weight of stock X in your optimal complete portfolio (also known as portfolio C or personal preference portfolio). Your utility function is given by U E(R) 12 Ao And you have the following information the weight of stock X in your optimal risky portfolio is 0.850, and your risk aversion parameter A 30. (Round your final

A 2year zerocoupon bond has a price of 95. A 5year zerocoupon bond has a price of 89. You own two 2year bonds and three 5year bonds. What is the duration of your portfolio

You have the following information Stock X Stock Y Stock Z Closing Shares Closing Shares Closing Shares Price Outstanding Price Outstanding Price Outstanding 50.00 250 81.80 400 106.57 200 40.57 30.35 97.39 At 401 pm on Day 1, Stock X issued a 25 stock dividend At 401 pm on Day 1, Stock Y split 41 Assume that you can own fractional shares

The riskfree rate is 1. The market returns 6 on average with a volatility of 20. A stock has a beta of 1.5. The stock pays dividends. Next year you expect a dividend of 5 (on average) and a exdividend price of 100 (on average). What is the price of the stock today (Provide the answer as dollars and centers, i.e. 250 and 23 cents is 250.23) Your

Suppose that the Federal Reserve System set the required reserve ratio equal to 0.3 and that the banking system holds 70 billion in excess reserves. If the amount of deposits is 1000 billion and the amount of currency holdings is 60 billion, then the currency ratio is. (Round your response to the nearest two decimal place.) Referring to part a,

8. Suppose Firm A has the capital structure as follows. Its tax rate is 21. Market Value (Smil.) Instrument debt 50 preferred Stock 20 common equity 60 Whats the WACC (Weighted Average Cost of Capital) Cost of capital 7 9 13

if mrs. escalante own a bond with a face value 100,000,000 with a coupon rate of 13% and a maturity date of 13years semi annually? how about the total of money from the number of periods?

a) based on 20X2, what is the capital intensity ratio? b) based on 20X2, what is full capacity of sales if it is operating at 80% capacity c) what is the eternal growth rate for 20X2? d) what is the sustainable growth rate for 20X2?

Use the following information for Delta Corporation to answer question 1 (20 marks total) Year 20x1 Net sales 1,500,000 Cost of goods sold 675,000 Depreciation 270,000 Interest paid 43,600 Cash Accounts receivable Inventory Net fixed assets Accounts payable Notes payable Longterm debt Common stock Retained earnings Tax rate Dividend payout 127,500

The following information on market conditions and two exchange traded funds (ETFs) has been collected for making further investment decisions. The market risk premium is 8.50% pa; the risk of the market portfolio is 10.00% pa. ETF X is a passively managed fund tracking the market index, it is well diversified with approximately zero residual or

The current bear market in stocks is driving people to invest in bonds. A few months ago, after reading a reddit post, your friend decided to buy a bond that matures on February 1st, 2047. This bond has an annual coupon rate of 4.395 paid out semi annually. Today (December 21st, 2022), your friend decides to sell the bond. Yields are currently

You are given three bonds for valuation and risk assessment. They all mature in five years, have a principal of 100 and coupons are paid annually. Further information is provided in the following table: Bond X Bond Y Bond Z Coupon rate 4% 8% 10% YTM 8% 8% 8% (a) Which bond should be priced at a discount and which bond should be priced at a

Four years ago, the Westin Company purchased a semiautomated machine with an installed cost of 80,000. It has an estimated life of 8 years from the time of purchase and is being depreciated using a straightline method towards zero salvage value. This existing machine can be sold today for 10,000. A new, fully automated machine can be purchased for

Jenny and Lisa live in Austin, TX and have been married for 8 years. Jennys net salary is 147,000 yearly. Lisas net salary is 190,000 yearly. They have the following joint assets... Home (FMV) Mutual fund account 730,000 200,000 Audi 2023 Q5 45 S line Premium quattro SUV (FMV) 53,900 GMC Sierra Limited (FMV) 40,000 Each has a retirement plan with

Suppose the first cash flow of a company is expected in year 5 and the cash flow is expected to be 1,619,488. A comparable company has earnings of 24,868,622 and a market capitalization of 559,029,791. Assuming a discount rate of 31%, find the present value (in year 0) of the company in dollars.

Sean is willing to invest 40,000 for five years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the fiveyear investment period, complete the following table

If the breakeven sale is 200,000 and the fixed costs are 100,000, what should be the unit variable cost The unit price is 8.

6. You just purchased a 20year 8.0 coupon bond with annual payments and par value of 1,000 for 1,225.00. What will be your capital gains yield on the bond if you hold it for one year and the bonds yield to maturity remains the same as it is now

1. (70 points) A family member named Fred is about to celebrate his 62nd birthday. He has a choice to make concerning Social Security. He can start collecting now at 70 of the full retirement benefit or he can wait 5 years until age 67 and collect 100 of the full retirement benefit or wait three more years until age 70 at which he could collect

Following table is a personal taxable income schedule for a single filer. What is the approximate average tax rate for a person who earns 85,000 From 0 20,000 50,000 To 20,000 50,000 100,000 Marginal Tax Rate 10 15 25

You are considering purchasing a bond. The bond pays an 8 coupon rate with semi annual payments, and it has 26 years left until maturity. You believe that the bond should carry a 9 yield. Calculate the following values 1. The bond price 2. The bonds current yield

You just moved to a new city for your first job. You dont currently have a dependable car, but you also know that youll need one. You are considering whether to lease a car or buy one. Suppose that you have the choice of 1. Buying a new car that will cost 75,000. You can finance this for 84 months at 7. Assume that the car will last exactly 10

Aiden is going to invest in an account paying an interest rate of 2.2% compounded daily. How much would Aiden need to invest, to the nearest dollar, for the value of the account to reach $1,060 in 10 years?

A customer purchases 10 M Dade Co. Florida 7.50% G.O. bonds at a 9.50 basis. How much interest will she collect each year?

A municipal bond holder buys a 5 percent coupon, annual payment muni bond at a price of $4,900. The bond has a $5,000 face value. In one year, they sell the bond for $4,975. The appropriate capital gains tax rate is 15 percent and the ordinary income tax rate is 28 percent. what taxes will they pay?

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Consider a bond P with 15 year maturity, 6% coupon annually paid, yield to maturity 7%. The dollar convexity is A. -853. 26 B. 120. 44 C. -10947 D. 10947

The 3 year class MACRS depreciation rates are (Yr1 = .3333; Yr2 = .4445; Yr3 = .1481; Yr4 = .0741). Jones and Co., Inc. is considering investment in a project which will involve purchase of a $4,500,0003 year class fixed (depreciable) asset; and an upfront investment in NWC of $500,000.The firm expects to be able to dispose of the asset at the end