1. Why is risk measurement and risk management so important? What is more important -- the measurement or the management of risk?
2. Compute the present value (PV) for an annuity that pays $1000.00 FOREVER if the opportunity cost is 8% and 5%.
3. A corporate bond ($1,000 par value) with a 9% coupon, paid semi-annually, is rated BB+. It is currently trading in the secondary market for $1,025.
If you buy this bond, how much interest in $ will you receive on each coupon date?
$90.00
$92.25
$45.00
$46.12