A portfolio of assets consists of the following as of January 1, 1997: 1) an annuity - immediate with 20 annual payments of 2,000 each, with the first payment on December 31, 2007 2) a 10,000 zero - coupon bond maturing on December 31, 2001 at an annual effective interest rate of 8% Calculate the modified duration of the portfolio as of January 1, 1997. A) 10.67 B) 11.11 C) 11.53 D) 11.98 E) 12.41
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- Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): The timeline starts at Period 0 and ends at Period 20. The timeline shows a cash flow of $ 20.72 each from Period 1 to Period 19. In Period 20, the cash flow is $ 20.72 plus $ 1,000. Period0121920 Cash Flows$20.72$20.72$20.72$20.72+$1,000 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value?David Palmer identified the following bonds for investment: BondA: A$1millionpar,10%annualcouponbond,whichwillmature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. (a) If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR), calculate the market price of Bond A on July 1, 2011. [N ote: Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.] (b） David purchased the Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016…Calculate, using effective annual rate of 5%, the convexity of the following assets. (i) 11-year zero coupon bond. (ii) A lump sum payment of $8500 in 5 years' time and a lump sum payment of $20000 in 20 years' time. (iii) An annuity immediate of $1 paid annually for 50 years
- You invest $6780 in a floating rate guaranteed investment certificate. For the first 30 months you earn 4.9% compounded semi-annually. For the next 8 months you earn 4.32% compounded monthly. What is the approximate maturity value of the certificate? A. 7857 B. 7775 C. 7875 D. 77852) Calculate the present value with compound interest considering an investment with maturity value of $13,024.19 at 5.2%p.a., compounded quarterly, after 6 years.Determine the exact simple interest on P500,000 invested for the period from January 15,1996 to October 12,1996, if the rate interest is 9.8%.
- BhaDavid Palmer identified the following bonds for investment: Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. David Palmer purchased Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016 when it was priced to have a yield to maturity (EAR) of 12.550881%. Assume all interests received were reinvested to earn a rate of return of 3% per quarter (in another investment account). Calculate: i) the current yield, ii) the 2-year capital gains yield and iii) the 2-year total rate of return on investment…A 30. Subject:- finance
- Use the following tables to calculate the present value of a $487,000 @ 5%, 5-year bond that pays $24,350 interest annually, if the market rate of interest is 10%. Round to the nearest dollar. Present Value of $1 Present Value of Annuity of $1 Periods 5 % 6 % 7 % 10 % Periods 5 % 6 % 7 % 10 % 1 .95238 .94340 .93458 .90909 1 .95238 .94340 .93458 .90909 2 .90703 .89000 .87344 .82645 2 1.85941 1.83339 1.80802 1.73554 3 .86384 .83962 .81630 .75131 2.72325 2.67301 2.62432 2.48685 4 .82270 .79209 .76290 .68301 4 3.54595 3.46511 3.38721 3.16987 5 .78353 .74726 .71299 .62092 5 4.32948 4.21236 4.10020 3.79079 .74622 .70496 .66634 .56447 6 5.07569 4.91732 4.76654 4.35526 7 .71068 .66506 .62275 .51316 | 7 5.78637 5.58238 5.38929 4.86842 8 .67684 .62741 .58201 .46651 8 6.46321 6.20979 5.97130 5.33493 9. .64461 .59190 .54393 .42410 9. 7.10782 6.80169 6.51523 5.75902 10 .61391 .55839 .50835 .38554 10 7.72173 7.36009 7.02358 6.14457If an investment of R50 000 is made in a fixed deposit account on 01 September 2022 and the interest on fixed deposit is R2 000 for the financial year ended 28 February 2023, then one may conclude that the interest rate on the fixed deposit is 8% per annum TrueFalseComplete the table below giving the principal P that must be invested at interest rate 10.5 % compounded quarterly to obtain a balance of A = $ 120000 in t years.
