A 20-year bond has a 4% coupon rate, a 6.22% YTM, and sells for $750. The current yield will be % and the expected capital gain yield over the next year should be %. Assume annual payment. | Write your answer as a whole number with two decimals: eg, 6.87% = 6.87.

A 20-year bond has a 4% coupon rate, a 6.22% YTM, and sells for $750. The current yield will be % and the expected capital gain yield over the next year should be %. Assume annual payment. | Write your answer as a whole number with two decimals: eg, 6.87% = 6.87.

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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Question

The current yield __% and the expected capital gain yield over the next year should be ___%

Thank you

A 20-year bond has a 4% coupon rate, a 6.22% YTM, and sells for $750. The current yield will
be
% and the expected capital gain yield over the next year should be
%. Assume annual payment. |
Write your answer as a whole number with two decimals: eg, 6.87% = 6.87.

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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Consider the return of investment as given in the following table: Year 2016 2017 2018 2019 2020 Amount (RM) 5000 5175 5394.94 5705.15 6047.46
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Calculate the APR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Year Number Cashflow 0 -11000 1 3000 2 3500 3 2900 4 2800
What is the profitability index of an investment with initial investment of OMR 6600 and net present value of OMR 2100, where the discount rate was 8 percent?
Assume an investment is priced today at $5,000 and has the following income stream: Year Cash Flow 1 123 2 3 4 $ 1,000 - 2,000 3,000 3,000 Would an investor with a required rate of return of 15 percent be wise to invest at a price of $5,000? Multiple Choice No, because the investment has a net present value of - $1,139.15. No, because the investment has a net present value of - $1,954.91. Yes, because the investment has a net present value of $1,069.66. Yes, because the investment has a net present value of $1,954.91. An investor would be indifferent between purchasing and not purchasing the above investment at the stated price.
A 6.5 percent coupon bond with 14 years left to maturity is priced to offer a yield to maturity of 7.2 percent. You believe that in one year, the yield to maturity will be 6.8 percent. What is the change in price the bond will experience in dollars? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Change in bond price
H
year payback period criteria and a required return of 12 percent. |Year Cash flow |(OMR) -26,000 18,000 10,000 7,000 -15,000 9,000 2 3 4 11. What is the net present value for the project? 12. What is the payback period for the project? 13. What is the discounted payback period for the project? 14. What is the profitability index for the project? 15. Given your analysis, should the fim accept or reject the projeet?
None
Suppose the MARR is 12%. Use the following table to answer the question--The IRR on the CMS Investment is CMS FMS Initial Investment Annual Revenue Useful Life (Years) A. 17.0% - 18.0% B. 20.0% - 21.0% C. 15.0% - 16.0% D. 0.5% -1.0% E. 11.0% - 12.0% $20,000 6,688 15 $29,000 9,102 in 5
H3
Calculate the Payback period (PBP) and Profitability Index (PI) of the investment and state the Pro’s and Cons of this method The annual incremental profits/ (losses) relating to the investment are estimated as follows: Years CF’s (000) Year 0 -175,000 Year 1 K11,000 Year 2 K3,000 Year 3 K34,000 Year 4 K47,000 Year 5 K8,000 Investment at the start of the project would be K175, 000,000.the investment sum assuming nil disposal value after five years, would be written off using the equal instalment method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end. Assume the cost of Capital is 12% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 D.f 1.00 0.893 0.797 0.712 0.636 0.567

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