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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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
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