An investor purchasing a British consol is entitled to receive annual payments from the British government forever. What is the price of a consol that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Present value

An investor purchasing a British consol is entitled to receive annual payments from the British government forever. What is the price of a consol that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Present value

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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Similar questions

An agreement stipulates payments of $5000,$3500 and $6000 in three, six and nine months, respectively from today. what is the highest price on an investor will offer today to purchase the agreement if he requires a minimum rate of return of 3.75%?
H1.
!
Today, each US Dollar can be exchanged for LLL 2.84 in LaLaLand. There is a general belief that three years from now the exchange rate will change to LLL 2.92. This information allows you to find the difference, each year, between the expected inflation rates between the USA and LaLaLand over the next three years. What is it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Difference in annual inflation rates %
Finance The practice of investing in a currency that offers the higher return on a covered basis is known as covered interest arbitrage. Currently, the six month Euro Libor rate is -0.52% per annum, and the six month TR libor rate is 18.06% per annum. If the spot rate is 8.5013TRY per Euro and the forward rates are as stated below, Forward Points EURTRY 1M FWD 1003 EURTRY 3M FWD 3411 EURTRY 6M FWD 7096 EURTRY 1Y FWD 14507 a) What is 6M Forward rate for euro? b) Do you have a covered interest arbitrage opportunity? c) If yes, how? d) How much is the arbitrage amount you can enjoy if you can borrow upto 1 million euros or its equivalent Turkish Lira?
If $43,000 is invested now, which of the following value is closest to the equivalent future dollars 6 years from now to earn a real interest rate of 3% per year when the inflation rate is 6% per year? Select one: а. 51,344 b. 72,833 c. 66,709 d. 79,519 е. 60,996
Please use this information to answer the question below: A US firm's expected Accounts Payable in Canada due in 1 year CAD 20,000,000 USD 0.65 Current Spot Rate (SR) for CAN Annual interest rate in US (Rh) 5% Annual interest rate in Canada (Rf) 3% If the firm Uses money market hedge, one year from now, their accounts payable will cost them
Do 2
The current spot rate is $0.80/A$ and the six-month forward rate is $0.7775/A$. One-year interest is 8% in the United States and 9% in Australia. An investor can borrow up to $ 500,000 or A$625,000, the dollar equivalent at the spot rate. a) Determine if IRP is holding between Australia (A$) and USA ($) b) If IRP does not exist, explain briefly how an investor would realize certain arbitrage profit in U.S. dollar terms. c) Explain (briefly) how IRP will be restored as a result of the arbitrage transactions investors carry out above. (Hint to answer : As more investors buy _____(A$ or $) at spot price, _____(A$ or $) will appreciate and hence, the spot price $0.80/A$ will increase so that the interest rate parity is restored.)
Consider a perpetuity that pays £500 per year with its first payment at the beginning of t=5. What is its present value today (t=0), given an 8% discount rate? A) £2678.7. B) £2135.6. C) £4593.9. D) £4253.6.
Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 Jordanian Dinar of payables due in 180 days. Assume the spot rate of the Jordanian Dinar is $2.02 and the 180 day forward rate is $2.00. The Jordanian interest rate is 5%, and the U.S. interest rate is 4% over the 180 day period. A)$391,210. B)$396, 190. C)$ 384,762. D)$400, 152 E)none of these.
Y2

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