Homework Answers
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP
PLEASE
Add Answer to:
A pension fund must pay out $1 million next year, $2 million the following year, and...
- 3. A pension fund must pay out $1 million next year. $2 million the following...
- 3. A pension fund must pay out $1 million next year. $2 million the following year, and then $3 million the year after that. If the discount rate is 8, what is the duration of this set of payments!) 2.15 years 2.29 years 2 years 2.53 years
10. You manage a pension fund. The fund promises to pay out $10 million in 5...
10. You manage a pension fund. The fund promises to pay out $10 million in 5 years. You buy $7472582 worth of par-value bonds that pay 6% annually and mature in 8 years. 5 years from now, when you need to pay your pensioners, the market rate on same-risk bonds is 8.1%. Assume that 5 years from now, the coupon payments that you have reinvested over the life of the fund are worth a total of $2561683. Five years from...
You manage a pension fund that promises to pay out $10 million to its contributors in...
You manage a pension fund that promises to pay out $10 million to its contributors in five years. You buy $7472582 worth of par-value bonds that make annual coupon payments of 6% and mature in five years. Right after you make the purchase, the interest rate on same-risk bonds decreases to 4.9%. If the rate does not change again and you reinvest the coupon payments that you receive in same-risk bonds, how much will you fall short of the money...
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must...
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must pay out $1 million per year to cover these annuities. Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% (flat term structure). You plan to cover this obligation by investing in 5- and 20-year maturity Treasury strips. (A) What is the duration of the funds 20-year pay-out obligation? (2 marks) (B) You decide to minimize...
9. You manage a pension fund that promises to pay out $10 million to its contributors...
9. You manage a pension fund that promises to pay out $10 million to its contributors in five years. You buy $7472582 worth of par-value bonds that make annual coupon payments of 6% and mature in five years. Right after you make the purchase, the interest rate on same-risk bonds decreases to 5.1%. If the rate does not change again and you reinvest the coupon payments that you receive in same-risk bonds, how much will you fall short of the...
Suppose a pension fund must have $10,000,000 five years from now to make required payments to...
Suppose a pension fund must have $10,000,000 five years from now to make required payments to retirees. If the pension wants to guarantee the funds are available regardless of future interest rate changes, it should: A. Sell a 5-year duration bond so that it matures with a book value of $10,000,000 B. Sell $10,000,000 face value discount bonds with a duration of five years C. Purchase 7-year, semi-annual coupon bonds that have a duration of five years D. Purchase 8-year,...
(20 marks) Question 4 Pension funds pay lifetime annuities to recipients. If a firm remains in business indefinitely. the pension obligation will resemble a perpetuity. Suppose that you are managi...
(20 marks) Question 4 Pension funds pay lifetime annuities to recipients. If a firm remains in business indefinitely. the pension obligation will resemble a perpetuity. Suppose that you are managing a pension fund with obligations to make perpetual payments of $3 million per year to beneficiaries. The yield to maturity on all bonds is 10%. To fully fund and immunize the obligations, you want to set up an immunization strategy using the following two high-grade corporate bonds. Delta Bond A...
You have been hired to run a pension fund for TelDet Inc, a small manufacturing firm....
You have been hired to run a pension fund for TelDet Inc, a small manufacturing firm. The firm currently has $5 million in the fund and expects to have cash inflows of $2 million a year for the first 5 years followed by cash outflows of $ 3 million a year for the next 5 years Assume that interest rates are at 8%. a. How much money will be left in the fund at the end of the tenth year?...
12.Your pension fund is invested in $40 million worth of bonds with a duration of 5.5...
12.Your pension fund is invested in $40 million worth of bonds with a duration of 5.5 years and $60 million worth of bonds with a duration of 8 years. The "target date" (the date that the fund needs to pay its contributors) is 6.909 years from now. To become duration-matched, the fund needs to shift how much of its money from 8-year duration bonds into 5.5-year duration bonds? Round your answer to the nearest dollar. HINT: This is a challenging...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $3.4 million per year to beneficiaries. The yield to maturity on all bonds is 18.5%. a. If the duration of 5-year maturity bonds with coupon rates of 14.6% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
- 3. A pension fund must pay out $1 million next year. $2 million the following year, and then $3 million the year after that. If the discount rate is 8, what is the duration of this set of payments!) 2.15 years 2.29 years 2 years 2.53 years
12. You manage a pension fund, which provides retired workers with lifetime annuities. The fund must pay out $1 million per year to cover these annuities. Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% (flat term structure). You plan to cover this obligation by investing in 5- and 20-year maturity Treasury strips. (A) What is the duration of the funds 20-year pay-out obligation? (2 marks) (B) You decide to minimize...
(20 marks) Question 4 Pension funds pay lifetime annuities to recipients. If a firm remains in business indefinitely. the pension obligation will resemble a perpetuity. Suppose that you are managing a pension fund with obligations to make perpetual payments of $3 million per year to beneficiaries. The yield to maturity on all bonds is 10%. To fully fund and immunize the obligations, you want to set up an immunization strategy using the following two high-grade corporate bonds. Delta Bond A...
You have been hired to run a pension fund for TelDet Inc, a small manufacturing firm. The firm currently has $5 million in the fund and expects to have cash inflows of $2 million a year for the first 5 years followed by cash outflows of $ 3 million a year for the next 5 years Assume that interest rates are at 8%. a. How much money will be left in the fund at the end of the tenth year?...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $3.4 million per year to beneficiaries. The yield to maturity on all bonds is 18.5%. a. If the duration of 5-year maturity bonds with coupon rates of 14.6% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
Most questions answered within 3 hours.
-
What is a highly unreasonable omission or misrepresentation
involving an extreme departure from the standards of...
asked 10 minutes ago -
What are the three mechanisms that control hormone release and a
example of each.
asked 23 minutes ago -
What would happen to the price level and real GDP if new, large
reserves of petroleum...
asked 25 minutes ago -
2. According to economists, people pollute because
a. They have low self esteem
b. They are...
asked 19 minutes ago -
For this project you will be writing up a simple Clock program
to keep track of...
asked 26 minutes ago -
The December 31, 2018, adjusted trial balance for Fightin' Blue
Hens Corporation is presented below.
...
asked 30 minutes ago -
E21-11 (L02) (Amortization Schedule and Journal Entries for
Lessee) Laura Leasing Company signs an agreement on...
asked 48 minutes ago -
Joe Mataya’s company provides after-sales support for all the
photo-copiers and high-load printers on our campus....
asked 55 minutes ago -
In a statistics class there are 12 students. Five of the
students are seniors and the...
asked 1 hour ago -
can someone please explain for me in any easy way what does
Dipole mean ?
asked 1 hour ago -
Consider the following grammar:
<S> → <A> a <B> b
<A> → <A> b | b...
asked 1 hour ago -
Chapter’s 2 “Dominos Sizzles with Pizza Tracker” Case Study.
Ansewer the following questions:
1) What kinds...
asked 1 hour ago