Your uncle has recently retired with two million dollars of superannuation funds. He wants to invest a part of his super fund to fixed income securities, preferably foreign government bonds. He found Germany Government bonds offering YTM of 3% whereas Greece Government bonds offering YTM of 5%. He got confused with two different rates since both of them are risk-free government bonds.
Explain your uncle the underlying cause of 2% differences in YTM between these two Government bonds. Assume your uncle is a risk-averse investor, offer him your valuable advice to invest one of these two securities.
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The lender and borrower expect inflation rates of 5% in 2019, 4.5% in 2020, and 3% in 2021. What is the geometric average of the expected inflation rates? If the lender requires a real rate of interest of 5%, what nominal rate would (s)he set for a 3 year loan (assume the loan is structured such that principle and interest are due in one lump sum at loan maturity)?
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Whiterock Care has a bond issue outstanding with 9 years remaining to maturity, a coupon rate of 8% with interest paid semiannually, and a par value of $1,000. The current market price of the bond is $1,158.70. What is the bond's (annual) yield to maturity?
In: Finance
Whiterock Care has a bond issue outstanding with 9 years remaining to maturity, a coupon rate of 8% with interest paid semiannually, and a par value of $1,000. The current market price of the bond is $1,158.70. What is the bond's (annual) yield to maturity?
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Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725
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James and Curtis are two friends having a drink at a local bar while they watch hockey. James says to Curtis, "I'll bet you a million bucks the Vancouver Canucks win the Stanley Cup this year." Curtis says, "You're on buddy!" As will always be the case, the Vancouver Canucks do not win the Stanley Cup. Curtis claims that James owes him a million dollars. Does he have a case?
canadian bussiness law subject
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Last year, Buch Gmbh, a German firm, paid a dividend of EUR 3,30 per year. The current stock price of the firm is EUR 194,98. An analyst documents that the current required return on equity for the firm is 9 percent and dividends are expected to grow at 14 percent for the next two years, 12 percent for the following five years, and 6,75 percent thereafter. Evaluate the firm's current stock price!
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The capital asset pricing model (CAPM) assumes that all securities are priced according to their unsystematic risk. Discuss the validity of this statement.
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The market value of a company is calculated as the sum of the net assets and owners equity on the company's balance sheet. Discuss the validity of this statement.
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As debtholders rank ahead of shareholders, it is expected that the required rate of return on debt will be higher than the required rate of return on shares. Discuss the validity of this statement.
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In the face of the global financial crisis, Kevin Rudd introduced government guarantees on deposits. Discuss covering at least the following two parts:
An introduction/summary of the Government Guarantee.
The general impact of this policy to the efficient frontier based on the Australian environment.
paragraph answer for each:
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The internal rate of return represents the rate of interest that recovers the initial investment outlay. Discuss the validity of this statement.
paragraph answer:
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A firm may choose a project with a rapid payback period rather than one with a larger net present value. Discuss the validity of this statement.
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Suppose that home country A has the following transactions with foreign country B. For each transaction, indicate and explain the appropriate debit and credit entry in A’s balance-ofpayments accounts.
a) A firm in country A sells $9,000 of iron & copper to a country B firm. Payment is made by the firm in B drawing down its checking account in a country A commercial bank.
b) An importer in country A buys $5,000 of apparel from a country-B supplier, paying for the goods by writing a check to be deposited into the B firm’s bank account in a country A bank
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How ROI would help managers in making the capital investment decision?
In: Finance