Cement Corporation has taken a one-year loan with a face value of $500,000 and a coupon rate of 18%. The loan requires payment of accrued interest and 40% of the principal at the end of six months. The remaining principal and accrued interest are due at the end of the yield is 12%, what is the duration of the loan in years? (Please round your answer to three decimal places.)

Cement Corporation has taken a one-year loan with a face value of $500,000 and a coupon rate of 18%. The loan requires payment of accrued interest and 40% of the principal at the end of six months. The remaining principal and accrued interest are due at the end of the yield is 12%, what is the duration of the loan in years? (Please round your answer to three decimal places.)

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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a loan of 25,000 has the following terms. the nominal interest rate is 8% compounded monthly; there will be n payments of 489.9 each starting at the end of the first month; and there will be one larger payment at the end of n+1 months. immediately after the 18th payment, the borrower refinances the loan with a new 24 month loan with a nominal 4.5% rate compounded monthly. the first payment is due one month after refinancing. what is the new monthly payment?
A company borrows $159,600 from a bank. The interest rate on the loan is 6 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next five years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation) Required 1: What is the amount of each semiannual payment? $ Required 2: In the first payment, what is the amount of interest cancelled? $ Required 3: In the fifth payment, what is the amount of loan paid net of interest? $ Required 4: In the last payment, what is the amount of interest cancelled? $ Required 5: Assume the debt contract has the option to make one extraordinary payment of up to 20% of the principal. If the company decides to exercise the right and make the extra payment together with the 8th payment, how much it must pay in dollars at the 9th payment to pay off the loan? $
Assume a $100,000 mortgage loan with 30-year term. The lender is charging an annual interest rate of 10% and two discount points at origination. Up-front financing costs paid to third parties total $1,000. Assuming the mortgage is held for five years and no prepayment, the lender's yield is percent. (round to two decimal places)
BALR Corp.borrows $500,000 to be paid off in three years. The loan payments are semiannual with the first payment due in six months, and interest is at 6%. What is the amount of each payment?
Consider a business loan maturing in three years that has three remaining annual payments in one, two, and three years. The annual payments are all equal to $2 Million. While analyzing the loan, you are using a YTM equal to 9%. Determine the duration of the loan. 1.94 O 2.00 O 1.91 O 3.00 O 1.83
CZ Enterprises borrows $202,775 at an interest rate of 10% today and will repay this amount by making 10 semiannual payments. Payments begin in six months. What is the amount of the payments that CZ will need to make? (Use the present value and future value tables, a financial calculator, a spreadsheet or the formula method for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest cent, $X.XX.) CZ will need to make payments of $ 26,260.31.
Suppose you take on a loan that is subject to an annual interest rate of 12%, with the interest rate being calculated at the end of each month. Two years later you pay back the loan in full by making a payment of $1,020. What was the original amount of the loan?
A bank makes a loan with the following characteristics: monthly payments for 10 years, with an APR of 6%. The amount loaned is $200,000. What is the duration of the loan? What is the expected change in loan value if the interest rate decreases by 1 percentage point immediately after approving the loan. Choose the closest answer below. 5.32 years; -$10,037 3.21 years; $6,056 4.55 years; -$8,577 6.74 years; $12,716
Suppose you take out a margin loan for $71,000. The rate you pay is an effective rate of 5.6 percent. If you repay the loan in six months, how much interest will you pay? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
INV4 3b Sitting on a beach in Florida early in May, a savvy investor recognizes that the sun beating down indicates a banner year for the US corn crop, which in turn portends an excess supply. Basic supply and demand analysis suggested to her that the corn price was very likely to go down. But the Farmer’s Almanac had predicted a wet and rainy summer, which convinced many corn analysts that corn prices would be climbing throughout the summer. To take advantage of this sun-inspired observation, our savvy investor sold short six contracts of August corn futures. The price per bushel was $1.62, and each contract was for 5000 bushels. The initial margin deposit is $3000 per contract with the maintenance margin at $2250. The prices of the futures on the four days following the short sales were 1.58, 1.60, 1.66, and 1.70. Calculate the current balance on each of the next four days.
A borrower and lender negotiate a $38,000,000 interest-only loan at a 6.0 percent interest rate for a term of 15 years. There is a lockout period of 10 years. Should the borrower choose to prepay this loan at any time after the end of the 10th year, a yield maintenance fee (YMF) will be charged. The YMF will be calculated as follows: A treasury security with a maturity equal to the number of months remaining on the loan will be selected, to which a spread of 150 basis points (1.50%) will be added to determine the lender's reinvestment rate. The penalty will be determined as the present value of the difference between the original loan rate and the lender's reinvestment rate. Required: a. How much will the YMF be if the loan is repaid at the end of year 13 if two year treasury rates are 3 percent? If two-year treasury rates are 5.0 percent, what will be the lender's reinvestment rate? Note: Do not round intermediate calculations, Round "YMF" to the nearest dollar amount. Enter…
Leven Corporation negotiated a short-term loan of $685,000. The loan is due in 10 months and carries a 6.86 interest rate. Use simple interest to calculate the total amount of thetioan. If necessary, round the answer to the nearest cent.

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