there are two bonds on the market:
(a)One-year $100 zero selling for $95.2381
(b)Two-year 8% coupon $1000 par bond selling for $1000
(1) Assume that the pure expectations theory for the term structure of interest rates holds and no liquidity premium exists. Find implied 1 year rate 1 year from now? show formulas
(2) for the same bonds, assume a liquidity premium of 0.5% for the 2-year long rate (i2t), what is the implied 1-year rate 1 years from now?
(3) your company plans to issue two-year coupon bonds but the current one-year rate suddenly increase to 10% and the two-year long rate becomes 9%, what coupon rate that you need to sell at par?
In: Finance
Your bank offers you a 10-year loan, with annual payments of $10,000 starting 1 year from today. If the annual interest rate is 6.7%, compounded annually, what is the principal amount of the loan?
In: Finance
(Bootstrapping) The bond prices of six-month and one-year zero-coupon bonds are 94.0 and 89.0. A 1.5-year bond that provides a coupon of 8% per annum semiannually currently sells for $94.84. A two-year bond that provides a coupon of 10% per annum semiannually currently sells for $97.12. Calculate the six-month, one-year, 1.5-year, and two-year zero rates
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6. Given a six (6) percent interest rate per year, compute the year seven (7) future value at year end if deposits of $1,000 and $1,500 are made at end of years two (2) and three (3) respectively, and a withdrawal of $500 is made at end of year five (5).
Group of answer choices
A. $5,918.91
B. $3,201.48
C. $2,992.04
D. $2,500.00
E. $2,670.14
In: Finance
In: Finance
The year-end Year 2 financial statements for Grandier Inc.,
report net sales of $115,004 million, net operating profit after
tax of $4,593 million, net operating assets of $39,502 million. The
year-end Year 1 balance sheet reports net operating assets of
$41,829 million.
The company’s year-end Year 2 net operating asset turnover
is:
Select one:
a. 2.91
b. There is not enough information to calculate the ratio.
c. 11.6%
d. 11.3%
e. 2.83
In: Accounting
On January 1, Year 1, Turner Company borrowed $58,000 from Lessing Inc. and signed a three-year installment note to be paid in three equal payments at the end of each year. The present value of an annuity of $1 for 3 periods at 7% is 2.62432. What is the amount of the installment payment?
In: Accounting
Currently, 30-year and 15-year mortgage loans can be taken with 3% and 2.5% annual interest rates, respectively. If you want to purchase a $300,000 value house with a 5% down payment. What would be your monthly payments for each mortgage loans; 30-year? and 15-year mortgages? Please show me the work?
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Analyze a project which has an investment cost of $2,000. Every year, starting next year (t=1), the project will generate $100 in revenue, but it will also incur $30 in expenses. The project will be considered an on-going project going on forever. If the cost of financing this project is 6%, then the NPV of the project is what?
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Jack bought a five-year 4.25% annual coupon bond for $974 a year ago.
Today, he sold the bond at the market yield of 4%.
What is Jack's approximate real rate of return if the inflation rate over the past year was 2.2%?
a) 1.80%
b) 2.05%
c) 5.76%
d) 5.98%
In: Finance