Question

%. (Round your response to the nearest one decimal Suppose that an Exxon Mobil bond has a return of 22% half the time and 5%

0 0
Add a comment Improve this question Transcribed image text
Answer #1

1) The probability of 22% return = 0.50 and the probability of 5% return = 0.50.

So, the expected return on this bond = (0.50 * 22%) + (0.50 * 5%) = 13.5%.

2) Ans: rises

Add a comment
Know the answer?
Add Answer to:
%. (Round your response to the nearest one decimal Suppose that an Exxon Mobil bond has...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Suppose that a bond has one year to maturity. The yield to maturity on the bond...

    Suppose that a bond has one year to maturity. The yield to maturity on the bond if it was »%. (Round your response to the nearest whole number) Consider a coupon bond with a face value of $900, one year to maturity, and a coupon rate of 8% Given a bought for $1130.00 and has a $1 100 face value with a coupon rate of 7% yield to maturity of8%the price the bond wil sel tris (Round your response to...

  • Round to the nearest cent Future value (with changing interest rates). Jose has $7,000 to invest...

    Round to the nearest cent Future value (with changing interest rates). Jose has $7,000 to invest for a 5-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 5 years for each of the following potential investments? a. Bank CD at 4.5% b. Bond fund at 8%. c. Mutual stock fund at 15%. d. New venture stock at 22%. a. What will be the value of Jose's bank...

  • Suppose two companies X and Z have exactly the same operating characteristics and their business risks...

    Suppose two companies X and Z have exactly the same operating characteristics and their business risks are perfectly correlated (i.e., exactly the same cashflows). They differ only in the way they finance their operations. Both companies will be liquidated exactly one year from now and shareholders will receive a liquidating dividend at the end of the year. Company X is expected to pay a liquidating dividend of $55 million, but this is uncertain, so shareholders discount this dividend at a...

  • 1) A bond is a ["financial contract: a borrower agrees to repay the amount that was...

    1) A bond is a ["financial contract: a borrower agrees to repay the amount that was borrowed and also a rate of interest over a period of time in the future.", "risk-free investment", "type of stock in a company", "rate of interest"] and also a ["risk-free investment", "rate of interest", "guarantee of payment", "rate of business growth"]           over a period of time in the future. A corporate bond is issued by firms, but bonds are also issued...

  • 3.2% 2.5% 0/1 pt Question 32 Assume that the current interest rate on a one-year bond...

    3.2% 2.5% 0/1 pt Question 32 Assume that the current interest rate on a one-year bond is 8 percent, the current rate on a two-year bond is 10 percent, and the current rate on a three-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the one-year interest rate expected during Year 3? (Base your answer on an arithmetic average rather than a geometri average.) 12% 16% 13% Incorrect. The yield on any...

  • ALTERNATIVE DIVIDEND POLICIES Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of...

    ALTERNATIVE DIVIDEND POLICIES Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $1.4 out of annual earnings per share of $4.75. Currently, Rubenstein Bros.' stock is selling for $32.00 per share. Adhering to the company's target capital structure, the firm has $10 million in total invested capital, of which 60% is funded by debt. Assume that the firm's book value of equity equals its market value. In past years, the firm has earned a return on...

  • Suppose you remembered that the coefficient of variation (CV) is generally regarded as being a better...

    Suppose you remembered that the coefficient of variation (CV) is generally regarded as being a better measure of stand-alone risk than standard deviation when alternatives being considered have widely differing expected returns. Calculate the missing CVS. (2.5 pts) Standard Deviation Coefficient of Variation (CV) High Tech = 20.0% OT-bills = 0.0% Collections = 11.2% OU.S. Rubber = 18.8 OM = 15.2% Chapter 8 Risk and Rates of Return 311 INTEGRATED CASE MERRILL FINCH INC. 8-23 RISK AND RETURN Asume that...

  • DIscussion: Government is known to utilize a product's elasticity measures to set taxes and subsidies. Use...

    DIscussion: Government is known to utilize a product's elasticity measures to set taxes and subsidies. Use this information to set policy on one of the following products: tobacco products, petroleum products, agriculture products, or medical products according to your goal. Research the government's tax/subsidy policy in these areas and any objectives of the tax policy. State your goal, your prescribed action, and why you believe it will work using the information you found. Response: The product I would choose to...

  • Please read below and then help me with the follow up questions. Thank you. Discussion: Government...

    Please read below and then help me with the follow up questions. Thank you. Discussion: Government is known to utilize a product's elasticity measures to set taxes and subsidies. Use this information to set policy on one of the following products: tobacco products, petroleum products, agriculture products, or medical products according to your goal. Research the government's tax/subsidy policy in these areas and any objectives of the tax policy. State your goal, your prescribed action, and why you believe it...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT