Question

In: Finance

You wish to retire in 30 years’ time and draw an annual income of $25,000 at...

You wish to retire in 30 years’ time and draw an annual income of $25,000 at the end of each year for a period of 25 years. How much money will you need to invest now (to the nearest dollar) if you can earn 8% on your investments.

Group of answer choices

A. $11,787

B. $118,609

C. $26,521

D. $266,869

At what interest rate would you need to earn from an investment in order to accumulate $17,632 after 5 years if you invest $12,000 now?

Group of answer choices

A. 6%

B. 10%

C. 8%

D. 7%

A bond has a market price that exceeds its face value. Which one of these features currently applies to this bond?

Group of answer choices

A. Yield to maturity is lower than the coupon rate

B. Yield to maturity is equal to the coupon rate.

C. Yield to maturity is greater than coupon rate.

D. Discount bond

Bond A and Bond B have 8% coupons, have a $1000 face value, and are priced at par value. Bond A has 3 years to maturity, whereas Bond B has 20 years to maturity.Which of the following statements is true ?

Group of answer choices

A. Bond B has lower price sensitivity to changes in interest rates than Bond A.

B. Both bonds are not exposed to interest rate risk as they have the same coupons.

C. Bond B has greater price sensitivity to changes in interest rates than Bond A.

D. Bond B has lower default risk than Bond A

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

JUST WRITTEN IN EXCEL, NO EXCEL FUNCTION IS USED

jeff jeffy answered 1 year ago
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