Reference no: EM131042406
Aspects of Corporate Finance Instructions:
If you use excel spreadsheets, please copy and paste them into MSWord.
Once you have completed the assignment, it needs to be lodged in the Assessments section of Learnline. Your assessments must be lodged using MSWord. PDF, Excel or paper copies will not be accepted.
Required:
1) Make sure your entire assignment can be readily printed on A-4 paper in portrait (preferred) or landscape format with appropriate page breaks. Do not have a portion of a "wide" worksheet expand beyond 1 page.
2) Make sure your name and student number are on every page of your submission.
Ethics:
This is not a group assignment; it is an individual assessment. Your solutions will likely be different from other students. If portions of your assignment are copied or very close to copying, all parties will be penalised for copying.
Copying would be considered plagiarism and CDU has strict policies. It is up to you to keep your assessment confidential.
Q. 1
Consider the following bonds:
Bond
|
Coupon Rate (annual payments)
|
Maturity (years)
|
A
|
0%
|
16
|
B
|
0%
|
11
|
C
|
5%
|
16
|
D
|
9%
|
11
|
Required:
a) What is the percentage change in the price of each bond if its yield to maturity falls from 7% to 6%?
b) Which of the bonds A-D is most sensitive to 1% drop in interest rates from 7% to 6% and why? Provide an intuitive explanation in your own words for your answer.
Q.2
What is the risk premium of a zero beta stock? Does that mean you can lower the volatility of a portfolio without changing the expected return by substituting out any zero-beta stock in a portfolio & replacing it with the risk free asset?
Please explain in your own words.
Q. 3
When you purchased your house, you took out a 30-year annual payment- mortgage with an interest rate of 5.5%. The annual payment on the mortgage is $12,000. You have just made a payment & have now decided to pay the mortgage off by repaying the outstanding balance.
Required:
a) What is the amount of the loan taken?
What is the payoff amount if:
b) You have lived in the house for 10 years?
c) You have lived in the house for 19 years?
d) You have lived in the house for 10 years and you decide to pay off the mortgage immediately before the 10th payment is due?
Emergency response criminal investigation problem
: Summarize each of the five core operational strategies as they pertain to criminal justice. Preventative patrol Routine incident response Emergency Response Criminal Investigation Problem Solving
|
Belgium-minted euro coin
: Students conducted an experiment to determine whether the Belgium-minted Euro coin was equally likely to land heads up or tails up. Coins were spun on a smooth surface, and in 330 spins,180 landed with the heads side up.
|
Planning for the future at east coast bank
: Paula Mason is one of three new assistant regional managers of East Coast Bank (ECB). Her position was recently created to provide administrative support and advice for the regional manager in charge of the southwest region, Ian Swartz. Based on the ..
|
Why is it difficult to stop protecting them
: What are main reasons for protecting "infant industries"? Why is it difficult to stop protecting them?
|
What is the risk premium of a zero beta stock
: FIN510 - Aspects of Corporate Finance - What is the risk premium of a zero beta stock? Does that mean you can lower the volatility of a portfolio without changing the expected return by substituting out any zero-beta stock in a portfolio & replacin..
|
An exporter provide financing for an importer
: a. Why would an exporter provide financing for an importer? b. Is there much risk in this activity? Explain
|
What is dumping
: Why does prohibiting it often work better in theory than in practice?
|
Paid the same amount
: James and his sister, Alice, each deliver 30 papers on their evening paper rounds and each are paid the same amount. one evening, Alison claims this system of equal payment to be unfair as her round takes on average longer than that of her brother..
|
Convincing evidence to support the claim
: In a representative sample of 1000 adult Americans, only 420 could name at least one justice who is currently serving on the U.S. Supreme Court. Using a significance level of 0.01, carry out a hypothesis test to determine if there is convincing ev..
|