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a) A bond has a current yield of 9% and a yield to maturity of 10%. Is the bond selling above or below par value? Explain.
b) Now suppose the bond in the previous question is selling for 102. What is the bond's yield to maturity? What would the yield to maturity be at a price of 102 if the bond paid its coupons only once per year?
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Forward premium. Compute the forward discount or premium for the Mexican peso whose 90-day for- ward rate is £0.05 and spot rate is £0.051. State whether your answer is a discount or premium.
Kessel Inc. offers a zero-coupon bond that has 15 years to maturity and the yield-to-maturity of similar bonds is 4%. What is the market price of Kessel Inc.'s bond? A Chicago, Illinois municipal bond has a maturity date in 20 years, offers a 6.5% co..
Suppose Pt follows the geometric Brownian motion dPt = - Derive a stochastic diffusion equation for Ft,T.
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Suppose AZT is a small value stock and that you use both the CAPM and the Fama-French model to compute its cost of capital. Under which model is the cost of capital for AZT likely to be higher?
In 2015, it was revealed that Volkswagen (VW) had installed software on its diesel cars in order to circumvent US emissions tests. Carefully, outline what this scandal involved, and explain why the actions of the VW management were unethical.
What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 7% of par, and a current market price of (a) $55, (b) $80, (c) $109, and (d) $149 (assume the market is in equilibrium with the required return equal ..
T. Martell Inc.'s stock has a 50% chance of producing a 30% return, a 35% chance of producing a 9% return, and a 15% chance of producing a -25% return. What is Martell's expected return?
Urban's which is currently operating at full capacity, has sales of $47,000, current assets of $5,100, current liabilities of $6,200, net fixed assets of $51,500, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acqu..
Suppose that Dr. Stone brewery could use recliamed municipal water waste water to make beer instead of the municipal water that is currently being used. this will help conserve limited fresh water resources and reduce the brewery's annual water bill...
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