Calculate the Macaulay duration of a 9%, $1,000 par bond that matures in three years if the bond's YTM is 14% and interest is paid semiannually. You may use Appendix C to answer the questions.

A. Calculate this bond's modified duration. Do not round intermediate calculations. Round your answer to two decimal places.

B. Assuming the bond's YTM goes from 14% to 13.0%, calculate an estimate of the price change. Do not round intermediate calculations. Round your answer to three decimal places. Use a minus sign to enter negative value, if any.

Statement of the Assignment:

Please prepare a comprehensive list of financial ratios as introduced in Chapter 3 of the textbook. Write a brief explanation below each financial ratio, e.g. what does the financial ratio measures or what the significance of it is.

For example:

Current Ratio = Current Assist / Current Liabilities

Current ratio measures whether our current assets, if liquidated, are sufficient to pay all of our current liabilities. A CR of 1.5, for example, shows that if we were to liquidate all of our current assets, we will be able to cover 1.5x our current liabilities, whereas a CR of 0.5 shows that liquidating our current assets only covers half of our current liabilities.

Problem 21-12 Black–Scholes model

Use the Black–Scholes formula to value the following options:

a. A call option written on a stock selling for $68 per share with a $68 exercise price. The stock's standard deviation is 6% per month. The option matures in three months. The risk-free interest rate is 1.75% per month.

b. A put option written on the same stock at the same time, with the same exercise price and expiration date.

Q2 2016:

The use of derivatives by banks for hedging, trading and speculation has been
the subject of great debate by regulators, customers and other stakeholders.
Critically evaluate a bank’s use of financial derivatives and the benefits and risks
this generates for both the bank and other stakeholders in the wider financial
system.

1. An investor puts $2,000 into an investment that will pay $2,500 one-fourth of the time; $2,000 one-half of the time, and $1,750 the rest of the time. What is the investor's expected return?

2. An investment will pay $2000 a quarter of the time; $1,600 half of the time and $1,400 a quarter of the time. The standard deviation of this asset is:

3. Investment A pays $1,200 half of the time and $800 half of the time. Investment B pays $1,400 half of the time and $600 half of the time. Which of the following statements is correct?

a. Investment A and B have the same expected value, but A has a greater risk

b. Investment B has a higher expected value than A, but also greater risk.

c. Investment A has a greater expected value than B, but B has less risk.

d. None of the statements are correct.

1. An investor deposits $400 into a bank account that earns an annual interest rate of 8%. Based on this information, how much interest will he earn during the second year alone? (choose a or b)

a. 32 b. 34.56

2. A monthly interest rate of 1% is a compounded annual rate of:

a. 12.5 b. 12.68

3. Suppose that a family wants to save money for a child's college tuition. The child will be attending college in 12 years. The cost of college education today is $120,000. If the interest rate is 6% and the inflation rate is 2%, then about how much does this family need to deposit in their savings account today?

a. 75633  b. 74420

4. Sharon deposits $150.00 in her savings account at the bank. At the end of one year she has $156.38. What was the interest rate that Sharon earned?

a. 4.3 b. 4.25

<please write down the explaination>

Why is the NPV method considered by finance specialists to be the best method for capital budgeting? What does the NPV of a project tell managers?

Question 2: You are to calculate the price a European call option considered “at the money” on a stock index with a current level of 300, a risk free rate of interest of 9% per annum, volatility of 16% per annum, 6 months until expiration, and has an annual dividend yield of 2.5%.

A portfolio to the right of the market portfolio on the CML is ___________.  

Which of the following statements about CML and SML is FALSE?

Which of the following portfolios most likely fall below the efficient frontier? The risk-free rate is 5%.

A corporate bond matures in 14 years. The bond has an 8 percent coupon and a par value of $1,000. Interest is paid semiannually. The bond is priced to yeild 6.0%. What is the bond's current price? Hint: Should it be above or below the face value?

Group of answer choices

$987.52

$1,006.57

$1,187.64

$1,199.35

$1,212.24

10. What are some concerns you might have about owning stocks and 10-year government bonds over the next 12 months? Support your outlook and concerns with citations from primary sources such as economist’s reports or investor surveys.

A newly issued bond pays its coupons once annually. Its coupon rate is 8%, its maturity is 20 years, and its yield to maturity is 10%.

a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 9% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. If you sell the bond after one year, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. Find the realized compound yield before taxes for a 2-year holding period, assuming that (1) you sell the bond after two years, (2) the bond yield is 9% at the end of the second year, and (3) the coupon can be reinvested for one year at a 3% interest rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e. Use the tax rates in (b) above to compute the after-tax 2-year realized compound yield. Remember to take account of OID tax rules. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

1. What is the current level of annualized inflation, unemployment rate, and annual real GDP growth in the U.S.? What is the five-year historical high and low for each variable? What is the outlook for each variable for the next year? Cite your sources.
2. How does each variable compare to other developed nations and emerging markets? Cite your sources.

Doug​ Klock, 56 just retired after 31 years of teaching. He is a husband and father of three​ children, two of whom are still dependent. He received a $140,000​lump-sum retirement bonus and will receive 2,700 per month from his retirement annuity. He has saved $151,000 in a​ 403(b) retirement plan and another​$93,000 in other accounts. His​ 403(b) plan is invested in mutual​ funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Doug has asked your advice in deciding where to invest his​ lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per​ month, considering he has two children in college and a nonworking spouse. His current monthly expenses total $6,000. He does not intend to begin receiving Social Security until age 67​,and his monthly benefit will amount to ​$1,500.He has grown accustomed to some risk but wants most of his money in​ FDIC-insured accounts.

a. Assuming Doug has another account set aside for​ emergencies, how much can he withdraw on a monthly basis to supplement his retirement annuity if his investments return is 4 percent annually and he expects to live 25 more​ years?