An investment in consol bonds promises to provide an interest payment of $2.5 million a year in perpetuity. If the interest rate is 3.3%, what is the value of this investment?
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- Explain the nature of the potential lending losses associated with each of the following: default risk, liquidity risk, and maturity risk. What would you pay for an annuity paying $3,000 per year for 12 years if the interest rate is 10%?Which of the following investments that pay will $18,500 in 8 years will have a higher price today? The security that earns an interest rate of 8.50%. The security that earns an interest rate of 12.75%.An investment is expected to result in equal payments of $3160.00 at the end of each of the next 5 years. (ordinary annuity) If the appropriate rate of return (discount rate) is 10%, what is the present value of the annuity stream? (annual compounding)
- Your liabilities consist of a payment of $5 million coming due in two years and a payment of $4 million coming due in three years. The market interest rate is 2%. What are the duration and convexity of your liabilities? O 2.71 and 7.64 O 2.80 and 9.17 O 2.21 and 5.39 O 2.44 and 6.20What is the future value of an investment that pays P2,500 at the beginning of each period with an interest rate of 5.5% after 5 payments?Assume annual mortgage payments of $12,000 for 30 years and an interest rate of 6.168% per year. What initial principal or PW will this repay?
- what;s the present value of perpetuity that pays % 1, 563 per year if the appropriate interest rate is 6.8% ?What is the yield to maturity on a simple loan for $1 million that requires a repayment of $2 million in five years’ time?What is the present value of an investment that will pay $1,000 in one year's time, and $1,000 every year after that, when the interest rate is 8%?
- What is the future value of an investment that pays P2,500 at the end of each period with an interest rate of 5.5% after 5 payments?An investment pays $4,000 per year at the beginning of each year for the next 4 years and then $6,000 per year at the beginning of each year for the next 6 years. Using a discount rate of 8%, what is the GPV of these payments?The annual payment of a 10-year fixed-income security is $50. The payments are made at the end of each year. The market-required rate of return is 10%. What is the current price of the securities?
