Homework Answers
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correct answer is option : The additional amount above the face value that the company must pay to repay the bond early,
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Question 16 5 pts Which of the following is the best explanation of what the call...
Scenario FOUR: A company has issued 10-year bonds, with a face value of $1,000. Interest at...
Scenario FOUR: A company has issued 10-year bonds, with a face value of $1,000. Interest at 8 % is paid quartery 17. If an investor has a nominal MARR 16 % , compounded quarterly, she will only purchase the bond if it sells at in the secondary market: a. Par value b. A premium The redemption price d. c. A discount 18. What are the quarterly interest payments on the bond? a. $40 b. $30 c. $20 d. $80 19....
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
QUESTION 8 (16 marks) (a) [5 marks] John purchases a $1000 face value 10-year bond with coupons of 8% per annum pai...
QUESTION 8 (16 marks) (a) [5 marks] John purchases a $1000 face value 10-year bond with coupons of 8% per annum paid half-yearly. The bond will be redeemed at C. The purchase price is $800 and the exact present value of the redemption amount C is $301.5116. Calculate the redemption amount C, and state if the bond is redeemed at par, discount or premium. (Hint: a at 3% is 14.87747 ag at 4% is 13.59033, a at 5 % is...
Question 5 1 pts In a 365-day year country, what is the price (to the nearest...
Question 5 1 pts In a 365-day year country, what is the price (to the nearest $) of a $1m face value, commercial bill purchased 90 days before maturity at a yield to maturity of 3.0%p.a.? Question 6 1 pts An investment costing $1,000 produces a single payment of $3,500 after 5 years. Calculate the return on the investment (%p.a. to one decimal place eg 7.3%) assuming semi-annual compounding. None of the above 26.7% 16.4% 15.4% $ Snipping Tool -...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
Question 16. You know that put call parity must hold and you observe the following information...
Question 16. You know that put call parity must hold and you observe the following information in the market: Spot: 195kr Strike: 180kr Call premium: 24kr Put premium: 7kr Time to maturity: 9 months exactly (the Call and the Put options have the same underlying security, strike price and maturity date) What is the risk-free rate?
Yield-to-Call A company issues a callable bond with the falling features: 7% coupon rate Semi-annual coupon...
Yield-to-Call A company issues a callable bond with the falling features: 7% coupon rate Semi-annual coupon payments $1,000 face value Matures in 15 years The bond may be called after 3 years. Call premium: If the bond is called anytime during the 2-years period beginning 3 years from today and ending 5 years from today, the company will pay a face value of $1,250 instead of $1,000. Compute the yield an investor will earn buying the bond today for $1,233.10...
1. As an investor, you are considering an investment in the bonds of the Conifer Coal Company. The bonds, which pay in...
1. As an investor, you are considering an investment in the bonds of the Conifer Coal Company. The bonds, which pay interest semiannually, will mature in eight years, and have a coupon rate of 9.5% on a face value of $1,000. Currently, the bonds are selling for $872. If you required return is 11% for bonds in this risk class, what is the highest price you would be willing to pay? b. What is the yield to maturity on these...
Question 21 2 pts Which of the following statements is false? 1. The lease-equivalent loan is...
Question 21 2 pts Which of the following statements is false? 1. The lease-equivalent loan is the loan that is required on the purchase of the asset that leaves the purchaser with the same obligations as the lessor would have. 2. Lease obligations themselves could trigger financial distress. 3. When a firm enters into a lease, it is committing to lease payments that are a fixed future obligation of the firm. 4. When a firm leases an asset, it is...
16 and 17 Question 16 2 pts A public good: is characterized by non-rivalry and non-excludability...
16 and 17
Question 16 2 pts A public good: is characterized by non-rivalry and non-excludability is available to all and cannot be denied to anyone. can not be produced profitably by private firms. all of the above. Question 17 2 pts A credit default swap can best be described as: O a bond backed by the value of an underlying bundle of mortgages O a type of insurance contract against the default of bonds and mortgage backed securities. the...
Scenario FOUR: A company has issued 10-year bonds, with a face value of $1,000. Interest at 8 % is paid quartery 17. If an investor has a nominal MARR 16 % , compounded quarterly, she will only purchase the bond if it sells at in the secondary market: a. Par value b. A premium The redemption price d. c. A discount 18. What are the quarterly interest payments on the bond? a. $40 b. $30 c. $20 d. $80 19....
QUESTION 8 (16 marks) (a) [5 marks] John purchases a $1000 face value 10-year bond with coupons of 8% per annum paid half-yearly. The bond will be redeemed at C. The purchase price is $800 and the exact present value of the redemption amount C is $301.5116. Calculate the redemption amount C, and state if the bond is redeemed at par, discount or premium. (Hint: a at 3% is 14.87747 ag at 4% is 13.59033, a at 5 % is...
Question 5 1 pts In a 365-day year country, what is the price (to the nearest $) of a $1m face value, commercial bill purchased 90 days before maturity at a yield to maturity of 3.0%p.a.? Question 6 1 pts An investment costing $1,000 produces a single payment of $3,500 after 5 years. Calculate the return on the investment (%p.a. to one decimal place eg 7.3%) assuming semi-annual compounding. None of the above 26.7% 16.4% 15.4% $ Snipping Tool -...
Question 21 2 pts Which of the following statements is false? 1. The lease-equivalent loan is the loan that is required on the purchase of the asset that leaves the purchaser with the same obligations as the lessor would have. 2. Lease obligations themselves could trigger financial distress. 3. When a firm enters into a lease, it is committing to lease payments that are a fixed future obligation of the firm. 4. When a firm leases an asset, it is...
16 and 17
Question 16 2 pts A public good: is characterized by non-rivalry and non-excludability is available to all and cannot be denied to anyone. can not be produced profitably by private firms. all of the above. Question 17 2 pts A credit default swap can best be described as: O a bond backed by the value of an underlying bundle of mortgages O a type of insurance contract against the default of bonds and mortgage backed securities. the...
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