Today is 1 July, 2019. Siobhán has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Siobhán purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 21 units of instrument A and 41 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of J2=4.05% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current duration of Siobhán's portfolio using a yield to maturity of j2=4.6% p.a. Express your answer in terms of years and round your answer to two decimal places.
Q: Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some…
A: YTM stands for "Yield to Maturity." It is a financial term that represents the total return…
Q: What are total finance charges over that three-year period?
A: Finance charges = Total payment made - Loan amount.
Q: A firm is considering leasing or buying a mower. The mower costs $1000 and can be depreciated and…
A: We first compute the written down value of the mower. Then we compare the sale price to compute the…
Q: Garth invests in ASP Isotopes Inc. (stock ticker ASPI), which is in the Chemicals industry and…
A: We need to use future value of ordinary annuity formula and future value formula to calculate final…
Q: Adidas' stock has a beta of 2.50, and Under Armour's stock has a beta of 0.76. The he risk-free…
A: CAPM is capital asset pricing model to compute the cost of equity based on company risk index as…
Q: Common stock value: Constant growth Seagate Technology is a global leader in data storage solutions…
A: For computing the historical annual growth rate of Seagate dividends we can use the compounding…
Q: The value of any asset is the PV of future cash flows it is expected to provide. Calculate the PV of…
A: Required Rate of Return = r = 5%Cash Flow for Year 0 = cf0 = -200Cash Flow for Year 1 = cf1 =…
Q: A bond with 12 years to maturity and a semiannual coupon rate of 7.64 percent has a current yield of…
A: Bond price refers to the current market value of a bond. It is determined by factors such as…
Q: According to the table above, interest rates are expected to O A. fall significantly in the future…
A: A yield curve is a graphical representation of interest rates on debt for a range of maturities or…
Q: I am willing to pay $5,000 today for a promise of $12,000 to be received 8 years from now. What does…
A: The concept of time value of money will be used and applied here. As per the concept of time value…
Q: Suppose that Wall-E Corporation currently has the balance sheet shown below, and that sales for the…
A: AFN means Additional funds needed.Additional funds needed = Increase in assets - Increase in…
Q: WEhat is beta for wyatt oil?
A: Beta shows the risk related to risk of overall market and beta show the risk and volatility of the…
Q: Find the monthly payment needed to amortize-principal and interest for the fixed-rate mortgage. Use…
A: PV = A * wherePV = present value of annuityA = periodic paymentsr = interest raten = time period
Q: You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive…
A: Present value is an estimate of the present value of future cash values that may be received at a…
Q: mortgage loan require you to pay $489.44 per month at 6% interest per annum. If you hold condo for…
A: Mortgage are secured loans against and are paid by equal monthly payments and these carry the…
Q: Beth purchased a $50,000 nonparticipating whole life insurance policy. The annual premium was…
A: In whole life insurance there is death coverage plus there is some cash component is also there in…
Q: Other than CAPM what other model can be used in valuing equity and WACC. Also list the assumptions…
A: The financial information can be analysed and presented using various types of models and frameworks…
Q: Suppose you are the money manager of a $3.92 million investment fund. The fund consists of four…
A: StockInvestment ($)BetaInvestment *…
Q: XYZ Corp has the following sales budget: $195,550 $185,950 Sales budget They collect 60% of sales in…
A: Sales budget is that which shows the forcasted sales of coming period on the basis of previous…
Q: or a 30-year house mortgage of $225,000 at 5.6% interest, find the following. (Round your final…
A: Mortgages are secured loans and these are paid by equal and fixed monthly payments that carry the…
Q: DuPont system of analysis Use the following financial information for AT&T and Verizon to conduct a…
A: Performance in terms of asset utilization, profit earning ability, equity returns, etc. of two or…
Q: he loan below was paid in full before its due date. (a) Obtain the value of h from the annual…
A: Annual Percentage Rate, is a financial term that represents the true cost of borrowing or the…
Q: An investment of $350,000 is made, followed by income of $200,000 each year for three ye There is no…
A: IRR is the break even rate at which present value of cash flow is equal to initial…
Q: Company A and B were offered the following rates per annum on a $20 million five-year loan. Company…
A: Floating (variable) and fixed interest rates are terms commonly associated with loans, including…
Q: (Market value analysis) Lei Materials' balance sheet lists total assets of $1.36 billion, $108…
A: Market to book ratio is calculated as market value of equity divided by book value of equity.The…
Q: Solve each problem and round your answers to the hundredth decimal point 1. Stephanie is going to…
A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…
Q: Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to…
A: The residual income model is a method used to estimate the intrinsic value of a stock by considering…
Q: The nominal interest rate in US is 3.5% and 5.5% in Canada, and expected inflation in US is 3% and…
A: To calculate the interest rate parity, interest rates are used.To calculate the purchasing power…
Q: Keidis Industries will pay a dividend of $4.15, $5.25, and $6.45 per share for each of the next…
A: current stock price = present value of dividend payments + present value of terminal value.Present…
Q: of credit or line of credit. As We Go Bank offers its customers a line-of-credit loan in which each…
A: Line of credit is the on demand business credit and is the short term business credit given by banks…
Q: Mathematically, what does the beta value represents the _____________ of the market line
A: Beta (β) represents the slope of the security market line (SML).The security market line is a…
Q: Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2017 1950 to 2017 Average 1950 to…
A: Standard deviation of a portfolio is a measure of its risk or volatility and it quantifies how much…
Q: A QwikStore has generated their daily sales records on the results of selling their 20 oz. "Awesome…
A: Expected valueOne frequently used financial notion is expected value. It denotes the expected worth…
Q: The corner shop is considering a new four year expansion project that requires an initial fixed…
A: Fixed Assets = fa = 210,000Life of Fixed Assets = l = 4Sales = s = 48,000Cost = c = 31,000tax Rate…
Q: Charlene is evaluating a capital budgeting project that should last for 4 years. The project…
A: Depreciation refers to the amortization of the capital expenditure over the period or the life of…
Q: Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free…
A: The expected return is the estimation of profit or loss that an investor determines from his…
Q: J&J has expected returns of 7% with a standard deviation of 10%. The W company has expected returns…
A: J & J companyW companyExpected return716Standard deviation1020correlation coefficient between…
Q: You plan to invest in bonds that pay 6.0%, compounded annually. If you invest $10,000 today, how…
A: Investment securities are also known as financial assets which are purchased to make profits. They…
Q: Roberto bought a $280,000 house, paying 20% down, and financing the rest at 5.2% interest for 30…
A: Mortgage loans are paid by monthly payments that carry the payment for interest and payment for…
Q: You took out a 30-year, $400,000.00 mortgage at 4.00% annual interest. How many months will it take…
A: Loans are paid by fixed and equal monthly payment and these carry payment for interest and payment…
Q: Find the APR (true annual interest rate), to the nearest half percent, for the following loan.…
A: The Annual Percentage Rate (APR) represents the yearly cost of borrowing money through loans or…
Q: You have a loan outstanding. It requires making four annual payments of $1000 each at the end of the…
A: The concept of time value of money will be used here which state that value of money changes with…
Q: Let , be the expected return of stocki, r represent the risk-free rate, b represent the Beta of a…
A: We can determine the market risk premium using Stock A expected returns.
Q: Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair…
A: The value of the enterprise can be the sum total of the market value of all the sources of financing…
Q: Problem 12-8 After-Tax Cash Flow from Sale of Assets (LG12-4) Your firm needs a computerized machine…
A: Salvage value after tax = Sale price of lathe - Tax expense on profit on sale of latheTax expense on…
Q: Bond prices and maturity dates. Les Company is about to issue a bond with annual coupon payments, an…
A: Price of bond is the present value of coupon payment and present value of the par value of the bond.
Q: Gen Lab is expected to pay out a dividend of $0.75 per share in one year. The expected stock price…
A: Given,expected dividend = $0.75 per shareexpected stock price = $42 per shareExpected return rate =…
Q: We receive 50 beginning of each month for a term of n-years. We wish to replace it with an annuity…
A: Annuity payments are the series of the uniform constant payments that are to be received at the end…
Q: Last year Blessing Ltd. paid a dividend of GH¢10. Shareholders require 20% return on their…
A: The fair value of any asset is the present value (PV) of the cash flow that asset/ investment is…
Step by step
Solved in 3 steps with 2 images
- Today is 1 July, 2019. Hélène has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Hélène purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 34 units of instrument A and 39 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2 = 4.87% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 2.2% p.a. and Hélène has just received her coupon payment. O a. $108.8953 O b. $122.7773 O c. $107.7104 O d. $106.4603Today is 1 July, 2019. Katrina has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Katrina purchased all instruments on 1 July 2011 to create this portfolio, which is composed of 28 units of instrument A and 44 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2 = 2.16% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument A per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 4.03% p.a. O a. $47.2049 O b. $48.7635 O c. $49.7461 O d. $68.4516Today is 1 July, 2019. Hélène has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Hélène purchased all instruments on 1 July 2012 to create this portfolio, which is composed of 30 units of instrument A and 50 units of instrument B. Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. Instrument B is a Treasury bond with a coupon rate of j2 = 3.46% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 3.52% p.a. and Hélène has just received her coupon payment. a.$99.8306 b.$99.8576 c.$101.5876 d.$99.4771
- In January 2019, Cannon announced the issuance of a $1.2 billion bond. The bonds have a coupon rate of 6.0% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch. Which of the following is true? Choose all that are correct. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings. The periodic interest payment will be $36 million. The yield on these bonds would have been lower if Standard and Poor's, Moody's, and Fitch had assigned higher credit ratings. The periodic interest expense will depend on the bond's coupon rate.This is for Actuarial Financial Mathematics, please no excel. please show your steps A 1000 bond issued on January 10, 2021 is paying coupons at nominal interest rate of 7% payable semiannually. The bond is redeemed at par and matures on January 10, 2031. The nominal yield rate convertible semiannually is quoted as 10%. (a) Find the price of the of the bond at issuance. (b) Find the total interest paid in the tenth coupon payment. (c) Find the principle repaid in the eleventh coupon payment. (d) Find the price of the bond on March 20, 2024.On July 1, 2013 an investment manager purchased five-hundred $1,000 par value bonds with an 8.75% coupon rate for $467,000. The bonds mature on July 15, 2021. a. According to this information, would you expect that the rates being offered by similar investments on the open market carry a rate that is higher, or lower, than the coupon rate? Explain. b. Find the current yield AND the yield to maturity. Show your work.
- A Treasury bond that settles on October 18, 2019, matures on March 30, 2038. The coupon rate is 5.45 percent, and the bond has a yield to maturity of 4.66 percent. What are the Macaulay duration and modified duration? (Use the duration functions in Excel to solve the problem. Do not round intermediate calculations. Round your answers to 4 decimal places.) X Answer is complete but not entirely correct. Macaulay duration Modified duration 12.0670 11.5297You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2019. The bonds have a par value of $2,000 and semiannual coupons. Company(Ticker) Coupon Maturity LastPrice LastYield EST $ Vol(000’s) Xenon, Inc. (XIC) 6.600 Jan 15, 2035 94.303 ?? 57,374 Kenny Corp. (KCC) 7.240 Jan 15, 2034 ?? 5.38 48,953 Williams Co. (WICO) ?? Jan 15, 2041 94.855 7.08 43,814 a. What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the bond’s current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)On 1 July 2018 MalekaLtd issues $6million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the timeof issuing the securities, the investors requiredrate of return was 6 per cent. Interest expense is determined using the effective-interest method. REQUIRED (i)Determine the issue price of the debenture (ii)Will thedebenture be issued at premium or discount?Why? (iii)Provide the journal entries at:1 July 2018, 30 June 2019, & 30 June 2020.
- On 01st Jan 2017, ABC Company issued A 5-year bond with a principal of $100 000, annual coupons of 5% p.a., and a call provision on 01 Jan 2020 at the price of $96.38. Given that the yield is 6% p.a. on 01st Jan 2020, would the ABC Company exercise the call provision to buy back the bond at $96.38? Explain why.Ma4. 3. A $25000, 11.5% bond with semi-annual coupons redeemable at par March 1, 2025, was purchased on November 15, 2018, to yield 9.5% compounded semi-annually. (a) What was the purchase price of the bond? (b) Find the value of discount or premium. Mention whether the value is premium or discount.David Palmer identified the following bonds for investment: 1. 1) Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. 2. 2) Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. 3. 3) Bond C: A S1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. (a) If Bond B is issued at face value and both Bond Band Bond A are having the same yield to maturity (EAR) at issuance, calculate the market price of Bond A on July 1, 2011.