If the volatility of each investment is 8 then find the valu

Assignment Help Finance Basics
Reference no: EM13811694

1. The current price of a bond is 100. The instantaneous rate of change or derivative of the price of the bond with respect to the yield rate is 700. The yield rate is an annual effective rate of 8%.

Calculate the Macaulay duration of the bond. Note: Recall that it is customary to drop the negative when computing volatility or modified duration.

(a) 7.00

(b) 7.49

(c) 7.56

(d) 7.69

(e) 8.00

Answer: ____________________

2. A fund earned a net investment income (i.e. Ending Balance (Starting Balance + Deposits/Withdrawals)) of 9200 during 1999. The beginning and ending balances of the fund were 100000 and 129200, respectively. A deposit was made at time K during the year. No other deposits or withdraws were made. The fund earned 8% in 1999 using the dollar­weighted method. 

Determine then date corresponding to time K. 


(a) April 1 (b) May 1 (c) July 1 (d) Sept. 1 (e) Oct. 1 

Answer: ____________________

3. 2000 is deposited into a newly opened fund on January 1, 1999. Another deposit is made into the fund on July, 1 1999. On January 1, 2000, the balance in the fund is 6000. The time­weighted rate of return in 1999 is 8.0% and the dollar­weighted rate of return is 4.8%. 

Calculate the balance of the fund on July 1, 1999, immediately before the deposit is made. Give your answer rounded to the nearest whole number. 

Answer:
____________________

4. The following two investment options are viewed under an annual effective interest rate of i. 

. Investment A is a 10­year zero coupon bond which redeems at par­value 250. 
. Investment B is a perpetuity­immediate paying an annual payment starting with 4 and having each successive payment increase by X% from the previous payment. 

If the volatility of each investment is 8, then find the value of X. Give your answer as a percentage rounded to two decimal places. 

Answer: ____________________ 

 

 

Reference no: EM13811694

Questions Cloud

The affect of language between speakers and listeners : How does language affect the relationship between speakers and listeners
Process design for the production : Using the Six Sigma DMAIC process, develop a new process design for the production of the Riordan electric fans. Be sure to take advantage of any global opportunities available to Riordan, such as lower labor costs.
Compilers check programs for syntax errors : Compilers check programs for syntax errors, but frequently a lack of one symbol (such as a missing brace or comment starter) will cause the compiler to spill out a number of diagnostics without identifying the real error
Calibration of new production equipment : Mary Chong, capital expenditure manager for PDA Manufacturing, knows that her company is facing a series of monthly expenses associated with installation and calibration of new production equipment. The company has $1 million in a bank account right ..
If the volatility of each investment is 8 then find the valu : 1. The current price of a bond is 100. The instantaneous rate of change or derivative of the price of the bond with respect to the yield rate is 700. The yield rate is an annual effective rate of 8%. Calculate the Macaulay duration of the bond. Note:..
How college students outside our class view graphic novels : Conduct a small study to discover how college students outside our class view graphic novels. Then select an idea, theme, or minute detail related to WWII that you learned about by reading Maus.
Present value of perpetuity-when dealing with estate taxes : Stock A has a current price of $40.00, a beta of 2.5, and a dividend yield of8%. If the Treasury bill yield is 5% and the market portfolio is expected to return15%, what should stock A sell for at the end of an investor’s three year horizon? What is ..
Calculate the current ratio and the total debt : Calculate the current ratio and the total debt to total assets ratio for 2010 and 2011.
Budgets planning and control : Budgets planning and control

Reviews

Write a Review

 

Finance Basics Questions & Answers

  What is the receivables turnover

Dome Metals has credit sales of $468,000 yearly with credit terms of net 60 days, which is also the average collection period. Dome does not offer a discount for early payment, so its customers take the full 60 days to pay.

  You are able to buy an investment for 1000 that gives you

you are able to buy an investment for 1000 that gives you the right to receive 438 in each of the next three years.

  Capital structure components and computation with before

capital structure components and computation with before and after tax cost of capital - theory.cost of capital coleman

  What is iris inc.s total assets

What is Iris Inc.'s Total Assets?

  The manager of sensible essentials conducted an excellent

the manager of sensible essentials conducted an excellent seminar explaining project evaluation techniques such as

  Complex capital structure

Discuss EPS presentation that would be required if Big Horn construction has (a) a simple capital structure or (b) a complex capital structure. WHat factors determine whether a capital structure is simple or complex?

  How large a sales increase can the company achieve without

bannister legal services generated 2 million in sales during 2010 and its year-end total assets were 1.5 million. also

  What is mom return on assets

Mind-Over-Matter (MOM) Tutors has a total assets turnover equal to 3.0x, a net profit margin equal to 4 percent, and a return on equity (ROE) equal to 15 percent.

  Which of the following accounts are included in working

which of the following accounts are included in working capital management?i. accounts payableii. accounts

  How many shares are in the treasury

A company whose charter autorizes 10 million shares, has sold 6 million to the public. Of these, 5 million are in the hands of investors today.

  Compute the current share price

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next fifteen years, because the firm needs to plow back its earnings to fuel increase.

  The purpose of the discussion board is to allow students to

the purpose of the discussion board is to allow students to learn through sharing ideas and experiences as they relate

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd