Suppose that an investor with a five-year investment horizon is considering purchasing a seven-year 9% coupon bond selling at par (semi-annual coupon payments). The investor expects that he can reinvest the coupon payments at an annual interest rate of 9.4% and that at the end of the investment horizon two-year bonds will be selling to offer a yield to maturity of 11.2%.
What is the total of coupon and coupon reinvestment? (Round your answer to 2 decimal points)
What is the sale price of the bond at the end of the holding period? (Round your answer to 2 decimal points)
What is the expected (holding period) return for this bond? (Enter the result in percentage points (10 if you find 10%), round your answer to 2 decimal points)
In: Finance
A baseball player is offered a 5-year contract that pays him the following amounts:
Year 1: $1.05 million
Year 2: $1.81 million
Year 3: $2.07 million
Year 4: $2.58 million
Year 5: $3.35 million
Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.92 million more than that which has been offered. Moreover, the player wants to receive his payments in the form of a 5-year ANNUITY DUE. All cash flows are discounted at 11.00 percent. If the team were to agree to the player's terms, what would be the player's annual salary (in millions of dollars)? (Express answer in millions. $1,000,000 would be 1.00)
In: Finance
The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year zeros is 6%. The yield to maturity on 2-year-maturity coupon bonds with coupon rates of 15% (paid annually) is 5.2%.
a. What arbitrage opportunity is available for an investment banking firm?
b. What is the profit on the activity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
In: Finance
Graph the year-over-year percentage growth of home prices in XX and explain the economic impact.
In: Economics
Suppose that an investor with a 3-year investment horizon is considering buying an 8-year 6% coupon bond selling at par (semi-annual coupon payments). The investor expects that she can reinvest the coupon payments at an annual interest rate of 7% and that at the end of the investment horizon all bonds will be selling to offer a YTM of 9%.
How much is the coupons & interest earned on reinvesting these coupon by the end of 3-yr?
What is the sale price of the bond by the end of 3 year?
What is the (annualized) expected holding period return for this bond?
Round your answer to 2 decimal places.
In: Finance
A 35-year-old man presented with a 6-year history of abdominal pain that he was convinced was cancer. For most of his life, the patient evidently had been dominated by a tyrannical father who never gave him the love he craved. When the patient was 29, his father died of carcinoma of the colon, and soon afterward, the patient developed abdominal pain. His complaints had gradually increased as his identification with his father, as well as his unconscious hostility towards him, increased. The patient came to the clinic almost daily with complaints of bloody stools (the feces were found to be free of blood) and the belief that he had cancer. He felt that none of the clinic doctors listened to him, just as his father had not
Treatment included development of longstanding, trusting, positive relationship with one of the clinic physicians, who allowed the patient time to talk about the illness. His symptoms gradually subsided during a 12-month period of supportive physician-patient relationship
1. An example of a symptom of a somatoform disorder is: _______
A. Obsession
B. Delusions of persecution
C. False sensory perception
D. Conversion
2. The patient’s hypochondriasis was treated successfully with: _______
A. Hypnosis
B. Neuroleptic therapy
C. Psychotherapy
D. ECT
In: Biology
Your company is estimated to make dividends payments of $2 next year, $3.6 the year after, and $4.6 in the year after that. The dividends will then grow at a constant rate of 7% per year. If the discount rate is 11% then what is the current stock price?
In: Finance
A six year project involves equipment costing $3,460,000 that will be depreciated using the seven-year MACRS schedule. If the estimated pre-tax salvage value for the equipment at the end of the project's life is $553,600, what is the after-tax salvage value for the equipment? Assume a marginal tax rate of 21 percent.
please show me how to do this by hand
In: Finance
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An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $4,750,000 and will be sold for $1,375,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) What is the: After-tax salvage value: |
In: Finance
Why is the Profit For the year less than the Post-Acquisition profit? (Retained Profit year-end - Pre-acquisition profit)
Example, I have an associate which I own 25% of share in it and it was acquired on 1 Jan. The accounting year end is 31 Dec. There is no any dividend distribution inside this situation.
Shouldn't I get the same amount for profit for the year with the post-acquisition profit? I am having Pre-acquisition retained profit of 247, abd the year-end retained profit(31 Dec) 355, which give me a 108 post-acquisition profit. However, inside the statement, there shows that my associate is having only 104 of Profit for the year.
May I know where is the missing 4, and what are the possible reasons resulting in this scenario?
In: Accounting