1. An insurance actuary knows that her company will owe 750,000 in five years. She decides to inv...
1. An insurance actuary knows that her company will owe 750,000 in five years. She decides to invest in STRIPS in order to fund this outlay and protect her company against interest rate risk. Each STRIP has a face value of $10,000 and pays an interest rate of 4%, compounded semiannually. How much must she pay today to fully fund the cash outflow that will occur in five years? Round intermediate steps to four decimals. Round your final answer to four decimals.
2. You can invest in taxable bonds that are paying a 9.3 percent annual rate of return or an equally risky municipal bond paying a 7.55 percent annual rate of return. Assuming your marginal tax rate is 21 percent, which option should you choose?
a) Taxable bonds
b) Muni bond
c) You would be indifferent between the two options
d) Cannot be determined
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1. An insurance actuary knows that her company will owe 750,000 in five years. She decides to inv...
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Irene is saving for a new car she hopes to purchase either four or six years from now. Irene invests $20.000 in a growth stock that does not pay dividends and expects a 6 percent annual before-tax return (the investment is tax deferred). When she cashes in the investment after either four or six years, she expects the applicable marginal tax rate on long-term capital gains to be 25 percent. (For all requirements, do not round Intermedlate calculations. Round your...
Please answers all incomplete questions ! Irene is saving for a new car she hopes to...
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questions !
Irene is saving for a new car she hopes to purchase either four or six years from now. Irene invests $20.000 in a growth stock that does not pay dividends and expects a 6 percent annual before-tax return (the investment is tax deferred). When she cashes in the investment after either four or six years, she expects the applicable marginal tax rate on long-term capital gains to be 25 percent. (For all requirements, do...
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Four years ago, Mary Stills bought six-year, 5.0 percent coupon bonds issued by the Blossom Corp. for $947.64. If she sells these bonds at the current price of $890.50, what will be her realized yield on the bonds? Assume similar coupon- paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%) Realised rate of return Sandhill, Inc., has four-year bonds outstanding that pay...
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Please answers all incomplete
questions !
Irene is saving for a new car she hopes to purchase either four or six years from now. Irene invests $20.000 in a growth stock that does not pay dividends and expects a 6 percent annual before-tax return (the investment is tax deferred). When she cashes in the investment after either four or six years, she expects the applicable marginal tax rate on long-term capital gains to be 25 percent. (For all requirements, do...
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Four years ago, Mary Stills bought six-year, 5.0 percent coupon bonds issued by the Blossom Corp. for $947.64. If she sells these bonds at the current price of $890.50, what will be her realized yield on the bonds? Assume similar coupon- paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%) Realised rate of return Sandhill, Inc., has four-year bonds outstanding that pay...
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