Suppose the average return on FTSE TMX Canada long-term bonds is 7.00% and the standard deviation is 9.00% and the averagereturn and standard deviation on T-bills are 3.30% and 2.50%, respectively. Further assume that the returns are normally distributed.Use the NORMDIST function in Excel® to answer the following questions. (Do not round intermediate calculations. Round the finalanswers to 2 decimal places.)a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 9% ? Less than 0% ?Greater than 9%Less than 0%%%b. What is the probability that in any given year, the return on T-bills will be greater than 9%? Less than 0%?Greater than 9%Less than 0%%%c-1. In 1981, the return on FTSE TMX Canada long-term bonds was -4.29%. How likely is it that such a low return will recur at somepoint in the future?Probability%c-2. T-bills had a return of 9.00% in this same year. How likely is it that such a high return on IT-bills will recur at some point in thefuture?Probability%

Let X be a normal random variable with mean μ and standard deviation σi.e.X∼N(μ,σ)Now we have excel…

Answered: Suppose the average return on FTSE TMX…

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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Select all the correct statements. The internal rate of return (IRR) generated by a positive cash flow stream of n payments a. is always given by the solution of a quadratic equation b. is always bigger or equal than -1 c. can be -2 for a suitable cashflow d. can be 17 for a suitable cashflow e. is always smaller or equal than +1
Use this formula to identify each item listed below ??=250((1+0.042512)12×15−1)÷(0.042512)FV=250((1+0.042512)12×15−1)÷(0.042512) payment compounded Interest rate time
9
FOLLOW THE FORMULAS GIVEN ABOVEDOWNVOTE IF YOU DONT FOLLOW THE FORMULAS
2. Denote by Cn and P calls and puts with strike price K 240 and exercise date N = 1. Let the bank account be Bn = e", with r = 0.05 and let the underlying cost So = 250. Assume that Co 75 and Po = 70. Check whether NA holds. If NA does not hold, propose an %3D arbitrage strategy.
7. Use the provided chart to solve this problem. Show your work.
brary TE(18,3.25,-139.90,100) E F RATE Nper 18 Pmt 3.25 PV Fv Type -139.90 100 Defined Names Formula result = 0.008500381 Help on this function Function Arguments = 18 = = -139.9 = 100 = number 3.25 Formula Auditing ? = 0.008500381 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. OK X Fv is the future value, or a cash balance you want to attain after the last payment is made. If omitted, uses Fv = 0. Cancel
For each of the following situations, Identify (1) the case as either (a) a present or a future value and (b) a single amount or an annulty. (2) the table you would use in your computations (but do not solve the problem), and (3) the Interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $10,100 for a trip you wish to take in four years. You are able to earn 10% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 40 years with savings in excess of $1,020,000. You expect to save $4,080 a year for 40…
= 6) Find the internal rates of return on a cash flow with deposit amounts of A = A₁ = 240, B₁ 120, A₂ = 20, B₂ = 290, and withdrawal amounts of Bo at times t = 0, t = 1, t = 2, respectively. = 40, 10,
Solve it correctly please. I
When we use the AFN equation to forecast the additional funds needed (AFN), we are implicitly assuming that all financial ratios are constant. A. True B. False
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)

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