Check my work810pointsSkippedMy pension plan will pay me $12,500 once a year for a 10-year period. The first payment will come in exactly five years. Thepension fund wants to immunize its position.Required:a. What is the duration of its obligation to me? The current interest rate is 7.0% per year.b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to beplaced in each bond?c. What will be the face value of the holdings in each zero?eBookComplete this question by entering your answers in the tabs below.PrintRequired A Required BRequired CWhat is the duration of its obligation to me? The current interest rate is 7% per year.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.ReferencesDurationyearsRequired ARequired B >

Let's examine the duration computation in greater depth. The average amount of time it takes to get…

Answered: Check my work 8 10 points Skipped My…

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

See similar textbooks

Similar questions

QUESTION 10 Ann gets a 30 year 3/1 Fully Amortizing ARM for $1,000,000, with monthly payments and monthly compounding. Ann pays $10,000 in closing costs. The initial rate is 2.50%. In the future, the rate will reset to 250 basis points above the LIBOR. There are no rate caps or floors. Suppose at origination and at the rate reset the LIBOR was 1%. Part 1: What is the loan balance when the rate resets (round to nearest whole number and enter without commas, e.g. 123,456 enter as 123456)? Part 2: What is the annualized true APR for the loan (round two decimal places and enter without % sign, e.g. 4.95% enter as 4.95)?
3.50 McCarthy Construction is trying to bring the company - funded portion of its employee retirement fund into compliance with HB-301. The company has already deposited $500,000 in each of the last 5 years. If the company increases its deposits beginning in year 6 by 15% per year each year through year 20, how much will be in the fund immediately after the last deposit, provided the fund grows at a rate of 12% per year? Solve using (a) tabulated factors, and (b) a spreadsheet.
Problem 1 An engineer planning for retirement is considering purchasing a savings bond with a face value of $50,000 and a bond interest rate (coupon rate) of 12% per year payable semiannually with a maturity date 10 years from now. The engineer's MARR is 10% per six-month period. (a) Would you recommend that the engineer purchase the bond if the purchase price is $36,000? (b) Suppose the engineer purchases the bond for $36,000 and is offered $36,000 for it five years later. Would you recommend selling the bond?
None
QUESTION 22 Ann wants to buy a building. The annual NOI for the building will be $175,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 8.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.20. What is the largest annual loan payment the lender will allow Ann to make based on the DSCR? OA. $1,746,506.99 B. $210,000.00 OC. $145,833.33 OD. $102,600.26
Suppose that a life insurance company has guaranteed a payment of $14 million to a pension fund 4.5 years fromfund and can invest the entire premium for 4.5 years at an annual interest rate of 6.25%, how much will the life in$13.7 million$17.8 million$18.4 million$14.1 million
None
13Assume you plan to borrow $400,000 from your bank to buy a home. The bank offers: • a 5-year fixed rate of 6.05%, compounded monthly. • a 3-year fixed rate of 5.75%, compounded monthly. If you choose to repay the borrowing in equal installments monthly over a 20 years, what would be the difference between your monthly payments at the two different APRs? a. $89.32 b. $68.94 c. $26.98 d. $154.58 14You expect that the interest rate will decrease in the near future, therefore you eventually choose the 3-year fixed rate. Then, what will be your mortgage balance after 3 years? a. $321,598.59 b. $452,321.21 c. $365,056.12 d. $379,325.89 15Three years passed, it's time to renew your mortgage. Upon your renewal, your bank is now offering a new 3-year fixed rate of 4.5%, what would be your monthly repayment amount after renewal? a. 2825.32 b. 2598.54 c. 1965.21 d. 2563.60
klp.3

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS