• Q : Compute yield to maturity of value bond with coupon rate....
    Finance Basics :

    Compute the yield to maturity of a $3,500 par value bond with a coupon rate of 7.5% (quarterly payments - that is, four times per year) that matures in 25 years. The bond is currently selling for $

  • Q : Forward contract on a stock market index....
    Finance Basics :

    Suggest a forward contract on the stock market index. Determine the false statement. Everything else being constant,

  • Q : Find equilibrium expected rate of return using capital asset....
    Finance Basics :

    If the expected return on the market portfolio is 14%. What is the equilibrium expected rate of return on Homton's stock according to the Capital Asset Pricing Model?

  • Q : Determining the japanese interest rate....
    Finance Basics :

    Suppose that U.S. interest rates rise from 3% to 4% this year. The spot exchange rate quotes at 112.5 JPY/USD and the forward rate for a one-year contract is at 110.5. What is the Japanese interest

  • Q : Determine forward swap rate....
    Finance Basics :

    The term structure of swap rates is: 1-year, 2.50%; 2-year, 3.00%; 3-year, 3.50%; 4-year, 4.00%; 5-year, 4.50%. The two-year forward swap rate starting in three years is closest to

  • Q : Short t-bond futures position....
    Finance Basics :

    The yield curve is upward sloping. You have a short T-bond futures position. The following bonds are eligible for delivery:

  • Q : Find current yield or cost of the preferred stock....
    Finance Basics :

    The preferred stock is now selling for $97 per share. What is the current yield or cost of the preferred stock? (Disregard flotation cost)

  • Q : Determining the value of the bond....
    Finance Basics :

    Consider a bond with par value of EUR 1,000 and maturity in three years, and that pays a coupon of 5% annually. The spot rate curve is as follows: 1-year, 6%; 2-year, 7%; and 3-year, 8%. The value o

  • Q : Time of issuance....
    Finance Basics :

    From the time of issuance until the bond matures, which of the following bonds is most likely to exhibit negative convexity?

  • Q : Find required rate of return for a stock with a beta....
    Finance Basics :

    If the real rate is 1.2%, the inflation premium is 1.6% and the market return is 11.0% what is the required rate of return(Must be 4 decimal places) for a stock with a beta of 1.25?

  • Q : Highest effective annual rate....
    Finance Basics :

    Lisa Smith, the treasurer of Bank AAA, has $100 million to invest for one year. She has identified three alternative one-year certificates of deposit (CDs), with different compounding periods and an

  • Q : Corporate bond paying an annual coupon....
    Finance Basics :

    A five-year corporate bond paying an annual coupon of 8% is sold at a price reflecting a yield to maturity of 6%. One year passes and the interest rates remain unchanged.

  • Q : Calculate the amount of time....
    Finance Basics :

    Consider a savings account that pays an annual interest rate of 8%. Calculate the amount of time it would take to double your money. Round to the nearest year.

  • Q : Bond macaulay duration....
    Finance Basics :

    The bond matures in 18 months and the next coupon will be paid 6 months from now. Which number below is closest to the bond's Macaulay duration?

  • Q : Computing effective annual rate....
    Finance Basics :

    An investor buys a Treasury bill maturing in 1 month for $987. On the maturity date the investor collects $1,000. Calculate effective annual rate (EAR).

  • Q : Closest value for modified duration....
    Finance Basics :

    A zero-coupon bond with a maturity of 10 years has an annual effective yield of 10%. What is the closest value for its modified duration?

  • Q : Find present value of amount for annual compounding....
    Finance Basics :

    what is the present value of $100 to be received in 3 years if the appropriate interest rate is 10 percent, annual compounding?

  • Q : Bonumeur currency risk....
    Finance Basics :

    Bonumeur SA is a French company that produces strollers for children and is specialized in strollers for twins and triplets for the EU market.

  • Q : Determining the value of the swap....
    Finance Basics :

    Just after the payment was made at the end of the first year, the continuously compounded spot one-year and two-year LIBOR rates are 8% and 8.5%, respectively. The value of the swap at that time is

  • Q : Us treasury spot curve....
    Finance Basics :

    You are analyzing two comparable (same credit rating, maturity, liquidity, rate) U.S. callable corporate bonds. The following data is available for the nominal spread over the U.S. Treasury yield cu

  • Q : Write usefulness and effectiveness of price earnings ratios....
    Finance Basics :

    Stocks are commonly valued using the Price Earnings (PE) model. Evaluate the usefulness and effectiveness of the price earnings ratios when valuing stock.

  • Q : Question regarding the delta-hedged position....
    Finance Basics :

    A non-dividend-paying stock has a current price of $100 per share. You have just sold a six-month European call option contract on 100 shares of this stock at a strike price of $101 per share.

  • Q : Draw indiffernce curve in expected return-standard deviation....
    Finance Basics :

    Draw 3 indiffernce curves in the "Expected Return-Standard Deviation" plane. One for a risk averse individual, one for a risk neutral person.

  • Q : Stock price falls and delta of options falls....
    Finance Basics :

    You have hedged the option exposure by buying 18,000 shares of the underlying. The next day, the stock price falls and the delta of the options falls to 0.54. In order to keep the options hedged, yo

  • Q : Compute risk premium and expected rate of return on stock....
    Finance Basics :

    What are the risk premium and expected rate of return on a stock with beta= 1.5? Assume a Treasury bill rate of 6% and a market risk premium of 7%.

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