2 - Note: You must show formulas and cell references when computing all values in the GREEN CELLS. Problem 2a: What would be the underestimation of your earnings as an investor if you use the discount rate instead of the investment rate to measure the returnon your investment if you buy a $5,000 T-bill that matures in 91 days for $4,999.55?Solution:Face value of the T-bill=Maturity =Price for the T-bill=Annualized discount rate =Annualized investment rate =Difference between annulized discount rate andinvestment rate =Therefore, if you use the discount rate, youwould underestimate your return by:Problem 2b: What is the annualized discount rate % and your annualized investment rate % on a Treasury bill that you purchase for $9,940 that will mature in 91 days for $10,000?Solution:Face value of the T-bill=Maturity =Price for the T-bill=Discount Rate =Investment Rate =

Problem 2a: CalculationFormulaFace Value of the T-bill$ 5,000givenMaturity91 daysPrice for the…

Answered: Problem 2a: What would be the…

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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What would be the return on your investment as a percentage to 6 decimal places if you buy a $5,000 T-bill that matures in 91 days for $4,999.55? % What would be the estimation of your earnings as an investor as a percentage to 6 decimal places if you use the discount rate instead of the investment rate to measure the return on your investment. % What would be the underestimation of your earnings as an investor as a percentage to 6 decimal places if you use the discount rate instead of the investment rate to measure the return on your investment? %
This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield. The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate y = yield so, the price of this consol will be Price = i/y I please need the solutions for part b) question b) In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…
sheet. _is the excess of resources (usually cash) received or paid over the amount of resources 1. loaned or borrowed. 2. is the interest paid on both the principal and the amount of interest accumulated in prior periods. 3. Future value interest factor (FVIF) is represented by the formula 4. An installment that requires a buyer to pay equal payments at a certain period is called. 5. _means that individuals maximize returns for a given level of risk or minimize risk if the returns are the same. 6. The basic decision rule is to accept the project if the net present value is 7. If the cash flow stream lasts forever or is indefinite, then it is called 8. If payment is made and interest is computed at the end of each payment interval, then it is called 9. One way to reduce risk to an acceptable level is through wherein you invest in different types of investments with different risks and returns. 10. If the cash flow happens at the beginning of each period, then it is called.
Why is the optimal interest coverage ratio equal to 1 if taxes are the only imperfection?
Part A: Choose the correct option for each question (investments) A) increased, increased B) increased, decreased C) decreased, increased D) decreased, decreased E) No change, increased F) No change, decreased Question 1. In an investment, what effect does. decreasing the frequency of payments have on the total principal invested and on the interest paid? 2. In an investment, what effect does decreasing the payment amount have on the total principal invested and on the interest paid? 3. In an investment, what effect does decreasing the frequency of compound periods have on the total principal invested and on the interest paid? 4. In an investment, what effect does increasing the interest rate have on the total principal invested and on the interest paid? 5. In an investment, what effect does decreasing the interest rate have on the total principal invested and on the interest paid? Answer [Ex: E) No change, Increased)
Question is in the screen shot
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(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Asman Salinas $10 $30 12 28 11 32 13 35 Time 1234 3 4 How would you interpret the meaning of the annual rates of retur? The rate of return you would have eamed on Asman stock from time 1 to time 2 is%. (Round to two decimal places.) The rate of return you would have earned on Asman stock from time 2 to time 3 is%. (Round to two decimal places.) The rate of return you would have eamed on Asman stock from time 3 to time 4 is%. (Round to two decimal places.) The rate of return you would have earned on Salinas stock from time 1 to time 2 is%. (Round to two decimal places.) The rate of return you would have earned on Salinas stock from time 2 to time 3 is %. (Round to two decimal places.) The rate of return you would have earned on Salinas stock from time 3 to time 4 is %. (Round to two decimal places.)
N2
Calculate the expected return on the asset on these financial accounting question
What is the profitability index for an investment solve this question
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