Homework Answers
The opportunity cost of buying the taco is your enjoyment of the burrito i.e equal to $5 .
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have a free coupon that can be used to buy either a taco
QUESTION 4...
On your way back from Argentina to the U.S., you buy a souvenir for your friend. You pay 150 Argentine Pesos for it. Ho...
On your way back from Argentina to the U.S., you buy a souvenir for your friend. You pay 150 Argentine Pesos for it. How much is your cost in US dollars? How many Euros can you buy with US$1,100? Which currency is more valuable in terms of a US dollar: Euro or Kuwaiti Dinar? How much is one Trinidad and Tobago dollar worth in US dollars? You have to settle an account payable in 1,500,000 Swiss Francs. What will be...
You go to a bank and are given these quotes: You can buy a euro for...
You go to a bank and are given these quotes: You can buy a euro for 14 pesos. The bank will pay you 13 pesos for a euro. You can buy a U.S. dollar for .9 euros. The bank will pay you .8 Euros for a U.S. dollar. You can buy a U.S. dollar for 10 pesos. The bank will pay you 9 pesos for a U.S. dollar. You have $1,000. Can you use triangular arbitrage to generate a profit?...
3. Suppose you buy a 3-year treasury note for $1,000 with a coupon rate of 2%. (a) If the risk-free rate remains at...
3. Suppose you buy a 3-year treasury note for $1,000 with a coupon rate of 2%. (a) If the risk-free rate remains at 2% for all treasury securities, how much could you sell this bond for after (i) 1 year, (ii) 2 years, (iii) 3 years? (b) If after 2 years you decide to sell this bond, how much would it be worth if the prevailing interest rate is (i) 1.5%, (ii) 3%? (c) Suppose after 1 year the interest...
You decided to buy a new car, and you can either lease the car or purchase...
You decided to buy a new car, and you can either lease the car or purchase it on a three- year loan. The car you wish to buy costs $32,000. The dealer has a special leasing arrangement where you pay $99 today and $450 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 7 percent APR. You believe you will be able...
Question 5 (1 point) You win the lottery! You can either take the money now or...
Question 5 (1 point) You win the lottery! You can either take the money now or wait 30 years and receive it then. If you get it now, then the best investment that you found is a 30 year CD that will earn 5%/year. The lottery offers you $5,000,000 if take the winnings today or $15,000,000 if you wait 30 years. Assuming their are no other risks, taxes, or opportunity costs (i.e. missing out on the fun of having $5...
4(b) You have an opportunity to buy a bond with a face value of $10,000 and...
4(b) You have an opportunity to buy a bond with a face value of $10,000 and coupon rate of 14%, payable semi-annually. NOTE: Interest per 6-month period is 7% of Face Value (i.e. $10,000x0.07 = $700 per 6-month period). (i) If the bond matures in five years and you can currently buy one for $8,000, what is your IRR for this investment? (ii) If your MARR for this type of investment is 20%, should you buy the bond?
Question #8 (20 Points): If you buy municipal bond (tax free) that cost $1,000 and will...
Question #8 (20 Points): If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.5% coupon for the next 20 years (so the maturity date is in 20 years). At maturity the bond returns the original $1,000. If there is a 2% annual inflation, what real rate of return will you receive?
Problem 6-58 Calculating Annuity Values [LO After deciding to buy a new car, you can either...
Problem 6-58 Calculating Annuity Values [LO After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $39,000 The dealer has a special leasing arrangement where you pay $107 today and $507 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 5 percent. You...
The probability of buying a movie ticket with a popcorn coupon is 0.608. If you buy...
The probability of buying a movie ticket with a popcorn coupon is 0.608. If you buy 10 movie tickets, what is the probability that 3 or more of the tickets have popcorn coupons? (Round your answer to 3 decimal places if necessary.) Seen multiple "correct" answers for this. Utilizing the calculator on my exam I received .951. The exam shows it as .999 with some crazy by hand method. We were taught to use the calculator functions. Trying to see...
P 4-45 (similar to Question Help You are looking to buy a car and can afford...
P 4-45 (similar to Question Help You are looking to buy a car and can afford to pay S1 0 per month lf the interest rate on a car loan s 73% per month for a 60-month loan, what is the most expens e car you can afford to buy? The amount that you can afford is S。(Round to the nearest dollar.)
3. Suppose you buy a 3-year treasury note for $1,000 with a coupon rate of 2%. (a) If the risk-free rate remains at 2% for all treasury securities, how much could you sell this bond for after (i) 1 year, (ii) 2 years, (iii) 3 years? (b) If after 2 years you decide to sell this bond, how much would it be worth if the prevailing interest rate is (i) 1.5%, (ii) 3%? (c) Suppose after 1 year the interest...
Question 5 (1 point) You win the lottery! You can either take the money now or wait 30 years and receive it then. If you get it now, then the best investment that you found is a 30 year CD that will earn 5%/year. The lottery offers you $5,000,000 if take the winnings today or $15,000,000 if you wait 30 years. Assuming their are no other risks, taxes, or opportunity costs (i.e. missing out on the fun of having $5...
4(b) You have an opportunity to buy a bond with a face value of $10,000 and coupon rate of 14%, payable semi-annually. NOTE: Interest per 6-month period is 7% of Face Value (i.e. $10,000x0.07 = $700 per 6-month period). (i) If the bond matures in five years and you can currently buy one for $8,000, what is your IRR for this investment? (ii) If your MARR for this type of investment is 20%, should you buy the bond?
Question #8 (20 Points): If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.5% coupon for the next 20 years (so the maturity date is in 20 years). At maturity the bond returns the original $1,000. If there is a 2% annual inflation, what real rate of return will you receive?
Problem 6-58 Calculating Annuity Values [LO After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $39,000 The dealer has a special leasing arrangement where you pay $107 today and $507 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 5 percent. You...
P 4-45 (similar to Question Help You are looking to buy a car and can afford to pay S1 0 per month lf the interest rate on a car loan s 73% per month for a 60-month loan, what is the most expens e car you can afford to buy? The amount that you can afford is S。(Round to the nearest dollar.)
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