Can you show me the math on how to solve each problem?? I have no clue the math involed using a BA II plus calculor. If you could show me the input calculator strokes along with the math involved that would help me out so much!!! thank you!!

2. (BD12a) Not sure where I went wrong Example: Today is a day in March 2525 and a bond with annual coupon rate of 3.80% just yesterday paid a coupon. The bond matures in Sept 2536 and its quoted bond price is 74.47 percent of par, compounded semiannually. Find the current yield and capital gains yield. Answer: Current Yield = 7.0835% Capital Gains Yield= 1.98% Practice:

Today is a day in Dec 2525 and a bond with annual coupon rate 6.50% just yesterday paid a coupon. The bond matures in Dec 2545 and its quoted bond price is 82.58% of par, compounded semiannually. Find current yield and capital gains yield. Answer: Current Yield= 7.87% (My answer= 4.12%) Capital Gains Yield= 0.43% (-3.75%)

3. (BD19b) Not sure where I went wrong Example: A bond with annual coupon rate of 5.10% and price of $1090 just yesterday paid a coupon. A total of 23 coupons remain to be paid. Suppose you buy the bond at todays price, hold it and receive 8 coupons, and then sell the bond. If at the time you sell the bond its yield to maturity has decreased a total of 50 basis points find bond selling price and the annual rate of return throughout the investment horizon.

Answer: Selling price not covered in lecture. ROR= 4.83%

Practice: (Same question but with the following elements):

ACR= 8.30%

Price= $1190

#Coupons Remaining= 23 # Coupons Received= 8 Basis Points Decreased by= 175

Answer: BSP= $1258 ($1394.42) ROR= 8.2% (5.27%)

Practice: A bond with annual coupon rate of 9.30% and price of $880 just yesterday paid a coupon. A total of 25 coupons remain to be paid. Suppose you buy the bond at todays price, hold it and receive 8 coupons, and then sell the bond. If at the time you sell the bond its yield to maturity has increased a total of 200 basis points find bond selling price and the annual rate of return throughout the investment horizon. Answer: BSP= $809 ($1138.62) ROR= 8.8% (8.04%)

5. (BD5c) No example or lecture The yield-to-maturity for a zero coupon bond is 11.60% for a 1-year bond, 12.75% for a 2-year bond, and 13.34% for a 3-year bond. You think the yield curve will remain the same throughout the future. You wish to make a 1-year investment, that is, buy a bond today and sell it in one year. You can pursue three alternative strategies, call them S1, S2, and S3. For strategy S1, you buy the 1-year bond and hold it to maturity, in which case your annual rate of return obviously is 11.60%. For S2, buy a 2-year bond today and sell it when it has 1 year remaining to maturity. For S3, buy a 3-year bond today and sell it when it has 2 years remaining to maturity. What are your average annual rates of return for strategies S2 and S3? (Assume, if necessary, that you can buy fractions of bonds.)

Answer: Strategy S2 earns 13.91% and strategy S3 earns 14.52% .

8. (ST20) Not sure where I went wrong

Example: The stock for a start up company will probably pay no dividends until exactly 8 years from now. At that time, it will pay $6.80 per year forever. You assess the intrinsic value of the stock with a 10.3% discount rate. Find the stocks intrinsic value today.

Answer: Buy if < 33.24, Sell if > 33.24 Practice: The stock for a start up probably will pay no dividends until exactly 5 years from today. At that time it will pay $8.00 per year, forever. You assess the intrinsic value of the stock with a 16.3% discount rate. Find the stocks intrinsic value today. Answer: 26.83 (23.07) Practice: The stock for a start up probably will pay no dividends until exactly 7 years from today. At that time it will pay $8.40 per year, forever. You assess the intrinsic value of the stock with a 10.7% discount rate. Find the stocks intrinsic value today. Answer: 42.66 (38.54) 13. (ST13) No example or lecture Yesterday (year-end 2525) the company paid its annual dividend of $1.80 . You believe that the stock merits a buy recommendation if it returns 19.8% per year. Your estimate of intrinsic value assumes that dividends grow smoothly in accordance with the constant exponential growth model. The annual dividend history is: year, dividend 2521, $1.09 2522, $1.35 2523, $1.62 2524, $1.51 Find the best estimate of the dividend growth rate and intrinsic value.

Answer: Intrinsic value equals $25.37 and the dividend growth rate is 11.8%

14. (SV3a) No example or lecture The Company just announced earnings per share of $4.90 , which means that their price to earnings ratio is 9.72. The Company has an asset turnover ratio (= Sales_t /Total assets_t) of 1.35, a net profit margin (= net income / sales) of 4.9%, a debt ratio (= total debt / total assets) of 45%, and a payout ratio (= dividends / net income) of 30%. The Company always operates at their sustainable growth rate and successfully holds constant all relevant financial ratios. You would like to invest in the stock such that you'll get a 12.0% total rate of return. What is your assessment of the stock's intrinsic value?

Answer: $57.18 18. (ER9c) Video never actually addresses the question? You form a portfolio that invests 60% of total funds in stock X and 40% in stock Z. Two possible outcomes exist. The probability is 35% that the first outcome occurs, in which case the rates of return equal 5% for X and 30% for Z. The probability is 65% that the second outcome occurs, in which case the rates of return equal 25% for X and 6% for Z. Find the diversification benefit, measured as the standard deviation reduction in basis points (BP), that the portfolio provides.

Answer: 916 BP 22. MR4a No example or lecture The standard deviation of expected returns for investments X and Y equal 15.0% and 13.5%, respectively. The correlation between returns for X and Y is -0.40. How much risk reduction, that is diversification benefit in basis points, does the minimum risk portfolio provide?

Answer: 641 25. MR3c No example or lecture The standard deviation of expected returns for investments X and Y equal 20.0% and 17.5% , respectively. The correlation between returns for X and Y is -0.50 . Find the combination of X and Y that yield the minimum risk portfolio. If your objective is to form a portfolio with these two securities that is not dominated by any other combination, which one statement is supported best by your finding?

Answer: If the expected return is greater for X than for Y, then dominant portfolios comprise exclusively positions that allocate between 45.6% and 100% in X