1. Calipe is considering buying some 10 year government bonds. They have a redemption value of $2,000 and biannual coupon payments of $50. If the current bond market is returning a rate equal to item 1, compounded biannually, what should Calipe be prepared to pay for them?2. Sebastian is considering buying shares in Aardvark Inc. which are currently providing a rate of return as shown in item 6. If the current government bond rate is shown in data item 1 and the market return is shown in item 5, what is the Beta on Aardvark shares and what does this signify to investors if it assumed they are currently priced on the CAPM line? Enter the beta to three decimal places.

1. Calipe is considering buying some 10 year government bonds. They have a redemption value of $2,000 and biannual coupon payments of $50. If the current bond market is returning a rate equal to item 1, compounded biannually, what should Calipe be prepared to pay for them?2. Sebastian is considering buying shares in Aardvark Inc. which are currently providing a rate of return as shown in item 6. If the current government bond rate is shown in data item 1 and the market return is shown in item 5, what is the Beta on Aardvark shares and what does this signify to investors if it assumed they are currently priced on the CAPM line? Enter the beta to three decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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