Ben Ramsay works for an investment company and is currently negotiating with three potential investors. The company offers two types of investment instrument available for new investors. Instrument alpha pays 10% annually. Instrument beta, on the other hand, pays 20% annually. Investors are allowed to divide their investments between these instruments such that a desired range of total return - between 10% to 20% is achieved. Suppose that the total investment of investor 1, investor 2, and investor 3,is PhP 20,000, PhP 50,000, and PhP 10,000, respectively. How much should each investor put money into each instrument? Investor 1: Instrument alpha = Php Instrument beta = PhP Investor 2: Instrument alpha = Php 25,000 Instrument beta = PhP 25,000 Investor 3: Instrument alpha = Php Instrument beta = Php

Ben Ramsay works for an investment company and is currently negotiating with three potential investors. The company offers two types of investment instrument available for new investors. Instrument alpha pays 10% annually. Instrument beta, on the other hand, pays 20% annually. Investors are allowed to divide their investments between these instruments such that a desired range of total return - between 10% to 20% is achieved. Suppose that the total investment of investor 1, investor 2, and investor 3,is PhP 20,000, PhP 50,000, and PhP 10,000, respectively. How much should each investor put money into each instrument? Investor 1: Instrument alpha = Php Instrument beta = PhP Investor 2: Instrument alpha = Php 25,000 Instrument beta = PhP 25,000 Investor 3: Instrument alpha = Php Instrument beta = Php

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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JasonSpector has shopped around for the best interest rates for his investment of$10,000 over the next year. He has found the following: Stated Rate Compounding 6.10% Annual 5.90% Semiannual 5.85% Monthly a. Which investment offers Jason the highesteffective rate of return?b. Now, assume that Jason wishes to invest hismoney for only six months and the annual compounded rate of 6.10 percent is notavailable. Which of the remaining investments should Jason choose?
Abdullah want to choose a better option for making investment, help him to decide which the better option is by calculating time value of money for the following: a) An investment of OMR. 50000 in a Bond which pays 6.75% interest for 15 years. b) A Bank deposit of OMR. 50000 which pays 6.75% interest for 15 years but compounding is done quarterly. c) Which of the two options should Abdullah accept? Why d) Assume yourself in place of Abdullah and share which investment would you prefer from the available investment opportunities in Oman? ijis Jia
A local entreprenuer asks you to invest $10,000 in a business venture. Based on your estimate, you would receive nothing for three years at the end of the four you would receive $4900, and at the end of year five you would receive $14500. If you estimates are correct, what would be the IRR on this investmenet?
Set up a system of equations and then solve using inverse matrics. An investor has found two investment that he wants to invest in. The first one pays 11% per year and a more risky investment pays 19% per year. He has $42,000 to invest and would like an annual income of $7,180.00 per year from his investments. The amount invested at 11% is $ The amount invested at 19% is $
A person has Php200,000.00 which he plan to put in an investment for 3 years. He is choosing between two investments. Investment A credits 5% interest compounded monthly, while investment B credits 5.3% interest compounded quarterly. Which investment is better?
1. What will be the present value, if $6,800 is discounted back 4 years at an interest rate of 4% compound semi-annually? 2. as the Fund manager for bank of Trinidad and Tobago Limited, you are to advise the following two clients based on their respective financial situations a) your best friend has asked to assist him in making the best investment out of the following options. which would you advise him to choose and why Option 1 $12,000 in 5 year's time at 6% interest Option 2 $15,000 in two year's time at 9% Option 3 $15,000 today. no strings attached Option 4 $5,000 each year for 2 years at 7% percent compounded semi- anually
c. A person who invests $1, 600 each year finds one choice that is expected to pay 3 percent per year and another choice that may pay 4 percent. What is the difference in return if the investment is made for four years? Round your answer to the nearest dollar. (Hint: Use Appendox A-3 or the Garman/Forgue companion website.) Round Future Value of Series of Equal Amounts in intermediate calculations to four decimal places.
Ali wants to choose a better option for making investment, help him to decide which the better option is by calculating time value of money for the following: a) An investment of OMR. 49000 in a Bond which pays 4.75% interest for 10 years b) A Bank deposit of OMR. 49000 which pays 4.75% interest for 10 years but compounding is done quarterly.
Suppose you have 1,000,000 PHP and you enter into a 1yr USDPHP NDF forward deal with City Bank, where you buy USD at the 1yr forward rate. Suppose a year from now, USDPHP spot is at 53.50 and 1yr USDPHP forward is at 54.00. Compute for the total PHP gain you realized.
An investor pays P1,100,000 for a mine which will yield a net income of P200,000 at the end of each year for 10 years and then will become useless. He accumulates a replacement fund to recover his capital by annual investments at 4.5%. At what rate (%) does he receive interest on his investment at the end of each year?
A company manager is faced with an investment proposal of Rp. 100,000,000, - with a period of 4 years and cash inflows every year as follows: Year 1 Rp. 40,000,000 Year 2 Rp. 30,000,000 Year 3 Rp. 30,000,000 Year 4 Rp. 20,000,000 Requested: a. With an interest rate of 12%, with the NPV and PI method, assist the manager in making decisions. Whether the project is accepted or rejected. b. If it is known that the second interest rate is 20% and the cost of capital offered is 17%, calculate the IRR, and make a decision whether to accept or reject the project.

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