The ways in which YTM (Yield to maturity) and the IRR ( Internal rate of return ) are same and the ways in which both are different. Introduction: The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 1

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Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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An insurance company has liabilities of £7 million due in 10 years' time and £9 million due in 17 years' time. The assets of the company consist of two zero-coupon bonds, one paying £X million in 7 years' time and the other paying £Y million in 20 years' time. The current interest rate is 6% per annum effective. Find the nominal value of X (i.e. the amount, IN MILLIONS, that bond X pays in 7 year's time) such that the first two conditions for Redington's theory of immunisation are satisfied. Express your answer to THREE DECIMAL PLACES.

An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t=0 he agrees to invest £5.3 for two years, he will receive £7.4 at time t=2 years. Alternatively, if at time t=0 he agrees to invest £5.3 at time t=1 for either one year or two years, he will receive £7.5 or £7.3 at times t=2 and t=3, respectively. Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing annual interest of 6.6% and is redeemable after 3 years at 110%. State your answer at 2 decimal places.

The one-year forward rates of interest, f+, are given by: . fo = 5.06%, f₁ = 6.38%, and f2 = 5.73%. Calculate, to 4 decimal places (in percentages), the three-year par yield.

Answer 2

Question

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

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Answer 3

Question

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 6

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 7

Chapter 8, Problem 12CTCR

Summary Introduction

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 8.1 - Prob. 8.1ACQ Ch. 8.1 - Prob. 8.1BCQ Ch. 8.2 - Prob. 8.2ACQ Ch. 8.2 - Prob. 8.2BCQ Ch. 8.3 - Prob. 8.3ACQ Ch. 8.3 - What are the weaknesses of the AAR rule?Ch. 8.4 - Prob. 8.4ACQ Ch. 8.4 - Prob. 8.4BCQ Ch. 8.5 - What does the profitability index measure?Ch. 8.5 - Prob. 8.5BCQ

The ways in which YTM (Yield to maturity) and the IRR ( Internal rate of return ) are same and the ways in which both are different. Introduction: The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Solution Summary: The author explains that both YTM and IRR are similar except in their applications.

Videos

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Want to see the full answer?

Chapter 8 Solutions

The ways in which YTM (Yield to maturity) and the IRR ( Internal rate of return ) are same and the ways in which both are different. Introduction: The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Solution Summary: The author explains that both YTM and IRR are similar except in their applications.

Videos

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different. Introduction: The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.

Want to see the full answer?

Chapter 8 Solutions

To discuss: The ways in which YTM (Yield to maturity) and the IRR (Internal rate of return) are same and the ways in which both are different.

Introduction:

The internal rate of return is a rate of discount, which makes the predictable investment’s NPV equals zero.