Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 10%. (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Volatility" to 2 decimal places.)
| Period 1 | Period 2 | Period 3 | Duration | Volatility | |
| A | 100 | 100 | 160 | years | |
| B | 80 | 80 | 240 | years | |
| C | 70 | 70 | 230 | years | |
Homework Answers
Present value is calculated by multiplying the present value factor with cash flow.
The proportion of total value is the present value of each year divided by its total present value of all three years.
Duration is proportion multiplied by year.
Volatility is Duration/1+r or Duration/1.1
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Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 8%. (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Volatility" to 2 decimal places.) Period 1 Period 2 Period 3 Duration Volatility A 40 40 40 years B 20 20 120 years C 10 10 110 years
Connect romheducation.com Valuing Bonds Saved Help 5 Problem 3-13 Duration 10 points Calculate the durations and...
Connect romheducation.com Valuing Bonds Saved Help 5 Problem 3-13 Duration 10 points Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 7% (Do not round Intermediate calculations. Round "Duration" to 4 decimal places and "Volatility to 2 decimal places.) 02:25:05 Period 1 А Perlod 2 80 Volatility 80 B Period 3 120 200 190 Duration years + years years 60 50 С 80 50 eBook References
Consider two securities that pay risk-free cash flows over the next two years and that have...
Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here: Security B1 Price Today $90 $72 Cash Flow in one Year Cash Flow in Two Years $100 $0 $0 $80 | B2 a) What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $80 in two years? [2 points] b) What is the no-arbitrage price of a security that pays...
e 210: Chapters: 8-11 Seved The following are the cash flows of two independent projects: Year...
e 210: Chapters: 8-11 Seved The following are the cash flows of two independent projects: Year Project A $(330) 160 160 160 160 Project B $ (330) 230 230 a:If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.) NPV Project Project A Project B b. Which of these projects is worth pursuing? Project A Project B Both Neither
Fox Co. has identified an investment project with the following cash flows. Year WN - Cash...
Fox Co. has identified an investment project with the following cash flows. Year WN - Cash Flow $ 1,210 1,120 1,550 1,910 4 a. If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c....
Wells, Inc., has identified an investment project with the following cash flows. Year NM Cash Flow...
Wells, Inc., has identified an investment project with the following cash flows. Year NM Cash Flow $ 1,050 1,280 1,500 2,240 a. If the discount rate is 7 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value at an interest rate of 13 percent? (Do not round intermediate calculations and round your answer to 2...
Consider the following cash flows: Year Cash Flow $ 21,500 39,500 57,500 Assume an interest rate...
Consider the following cash flows: Year Cash Flow $ 21,500 39,500 57,500 Assume an interest rate of 8.3 percent per year. a. If today is Year O, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year O, what is the future value of the cash flows ten years from now? (Do not round intermediate calculations and...
Your consulting firm will produce cash flows of $195,000 this year, and you expect cash flow...
Your consulting firm will produce cash flows of $195,000 this
year, and you expect cash flow to keep pace with any increase in
the general level of prices. The interest rate currently is 5.1%,
and you anticipate inflation of about 1.1%. a. What is the present
value of your firm’s cash flows for years 1 through 4? (Do not
round intermediate calculations. Round your answer to 2 decimal
places.) b. How would your answer to (a) change if you anticipated...
Thank you for any help. Consider the following cash flows: Year Cash Flow $22,700 40,700 58,700...
Thank you for any help.
Consider the following cash flows: Year Cash Flow $22,700 40,700 58,700 Assume an interest rate of 9.5 percent per year. a. If today is Year O, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year O, what is the future value of the cash flows ten years from now? (Do not...
An investment project costs $10,000 and has annual cash flows of $2,890 for six years. a....
An investment project costs $10,000 and has annual cash flows of $2,890 for six years. a. What is the discounted payback period if the discount rate is zero percent? (Enter O if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 4 percent? (Enter O if the project never pays back. Do not round intermediate calculations and...
Connect romheducation.com Valuing Bonds Saved Help 5 Problem 3-13 Duration 10 points Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 7% (Do not round Intermediate calculations. Round "Duration" to 4 decimal places and "Volatility to 2 decimal places.) 02:25:05 Period 1 А Perlod 2 80 Volatility 80 B Period 3 120 200 190 Duration years + years years 60 50 С 80 50 eBook References
Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here: Security B1 Price Today $90 $72 Cash Flow in one Year Cash Flow in Two Years $100 $0 $0 $80 | B2 a) What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $80 in two years? [2 points] b) What is the no-arbitrage price of a security that pays...
e 210: Chapters: 8-11 Seved The following are the cash flows of two independent projects: Year Project A $(330) 160 160 160 160 Project B $ (330) 230 230 a:If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.) NPV Project Project A Project B b. Which of these projects is worth pursuing? Project A Project B Both Neither
Fox Co. has identified an investment project with the following cash flows. Year WN - Cash Flow $ 1,210 1,120 1,550 1,910 4 a. If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c....
Wells, Inc., has identified an investment project with the following cash flows. Year NM Cash Flow $ 1,050 1,280 1,500 2,240 a. If the discount rate is 7 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value at an interest rate of 13 percent? (Do not round intermediate calculations and round your answer to 2...
Consider the following cash flows: Year Cash Flow $ 21,500 39,500 57,500 Assume an interest rate of 8.3 percent per year. a. If today is Year O, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year O, what is the future value of the cash flows ten years from now? (Do not round intermediate calculations and...
Your consulting firm will produce cash flows of $195,000 this
year, and you expect cash flow to keep pace with any increase in
the general level of prices. The interest rate currently is 5.1%,
and you anticipate inflation of about 1.1%. a. What is the present
value of your firm’s cash flows for years 1 through 4? (Do not
round intermediate calculations. Round your answer to 2 decimal
places.) b. How would your answer to (a) change if you anticipated...
Thank you for any help.
Consider the following cash flows: Year Cash Flow $22,700 40,700 58,700 Assume an interest rate of 9.5 percent per year. a. If today is Year O, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year O, what is the future value of the cash flows ten years from now? (Do not...
An investment project costs $10,000 and has annual cash flows of $2,890 for six years. a. What is the discounted payback period if the discount rate is zero percent? (Enter O if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 4 percent? (Enter O if the project never pays back. Do not round intermediate calculations and...
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