Question

In: Finance

1a.An eight-year corporate bond with a face value of $1000 has a 7 percent coupon rate....

1a.An eight-year corporate bond with a face value of $1000 has a 7 percent coupon rate. What should be the bond's price if the required return is 5 percent and the bond pays interest semiannually?

A. $1,062.81 B. $1,062.10 C. $1,053.45 D. $1,052.99 E. $1,130.55

1b. Upon graduating from college this year, you expect to earn $50,000 per year. If you get your MBA, in one year you can expect to start at $70,000 per year. Over the year, inflation is expected to be 5 percent. In today's dollars, how much additional (less) money will you make from getting your MBA (to the nearest dollar) in your first year?

A. -$2,462 B. $8,333 C. $8,750. D. $16,667 E. $20,000

1c. The duration of a 270-day T-Bill is (in years)

A. 0.493.

B. 0.246.

C. 1.

D. 0.7397

E. indeterminate.

Solutions

Expert Solution

Answer 1a:- Option (E): $1,130.55

Explanation:-

Answer 1b:- Option (D): $16,667

Explanation:-

Answer 1c:- Option (D): 0.7397

Explanation:-

jeff jeffy answered 1 year ago
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