Homework Answers
Answer:
Annual payment P=80
rate at beginning R1=16%
Rate at year end R2=20%
Rate of return = {P-(P/(R1) -P/(R2))}/P ={80-(80/(16%)-80/(20%))}/80=25%
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The Canadian Government has once again decided to issue a consol (a bond with a never ending interest payment and no maturity date). The bond will pay $80 in interest each year (at the end of the year), but it will never return the principal. The current discount rate for Canadian government bonds is 7%. What should this consol bond sell for in the market?
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Question 13 10 points Save Answer Why does $100 in the future not have the same value as $100 today? T TT T- E- Arial 3 (12pt) Path: p Words:0 Click...
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Question 13 10 points Save Answer Why does $100 in the future not have the same...
Question 13 10 points Save Answer Why does $100 in the future not have the same value as $100 today? T TT T- E- Arial 3 (12pt) Path: p Words:0 Click Submit to complete this assessment. Question 13 of 13 « Save and Submit JUN W P W 14
Perpetuities. The Canadian Government has once again decided to issue a consol (a bond with a...
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Question 13 10 points Save Answer Why does $100 in the future not have the same value as $100 today? T TT T- E- Arial 3 (12pt) Path: p Words:0 Click...
80 The price of the consol is $ b. You are concerned that the interest rate may rise to 6 percent. Compute the percentage change in the price of the consol and the percentage change in the interest rate. Compare them. Instructions: Enter your response for dollar amounts rounded to the nearest penny (two decimal places ) and answers for percentages rounded to the nearest tenth (one decimal place). The new price of the consol would be $ 66.67 20...
Question 13 10 points Save Answer Why does $100 in the future not have the same value as $100 today? T TT T- E- Arial 3 (12pt) Path: p Words:0 Click Submit to complete this assessment. Question 13 of 13 « Save and Submit JUN W P W 14
Perpetuities. The Canadian Government has once again decided to issue a consol (a bond with a never-ending interest payment and no maturity date). The bond will pay $80 in interest each year (at the end of the year), but it will never return the principal. The current discount rate for Canadian government bonds is 9%. What should this consol bond sell for in the market? What if the interest rate should fall to 8%? Rise to 10%? Why does the...
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Determine the annual holding period rate of return on a 10-year, $30,000 discount bond that you originally purchased for $13,200 and sold 7 years later for $22,500 TT T Arial 3 (12pt) T-5 - E MS @ 3's Path:p Words:0
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