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Question 1 - Refer to Figure 2.3 and look at the Treasury bond maturing in May 2042.
a. How much would you have to pay to purchase one of these bonds?
b. What is its coupon rate?
c. What is the yield to maturity of the bond?
Question 2 - Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with an 3.0% coupon if it is currently selling at par and the probability distribution of its yield to maturity a year from now is as follows: (Assume the entire 3.0% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.)
Question 3 - Suppose your expectations regarding the stock price are as follows:
Satiate of the Market
Probability
Ending Price
HPR (including dividends)
Boom
0.30
$140
48.5%
Normal growth
0.23
110
13.5
Recession
0.47
80
-19.5
Use Equations E(r) = ∑sp(s)r(s), σ2 = ∑sp(s)r(s) - E(r)2 to compute the mean and standard deviation of the HPR on stocks.
The company is considering selling 1,000 units that are in danger of becoming obsolete. What is the minimum price it would be willing to take for the 1,000 units?
The cumulative feature of preferred stock. limits the amount of cumulative dividends to the par value of the preferred stock.
The general manager was confused because the company had a $9,000 profit, yet seemed, as noted above, $10,000 worse off in its cash position. Explain briefly how, in general, this difference between profit and cash change can happen.
santo Company budgeted selling expenses of $30000 in January, $37000 in February, and $45000 in March. Actual Selling expenses were $31000 in January, $35500 in February and $53000 in March.
Suppose 2007 sales are projected to increase by 15 percent over 2006 sales. Determine the additional funds needed. Assume that the company was operating.
Impairments are: a) recognized as a realized loss if the impairment is judged to be temporary. b) based on fair value for available-for-sale investments and on negotiated values for held-to-maturity investments.
The following is an excerpt from a conversation between two sales clerks, Tracy Rawlin and Jeff Weimer. Both Tracy and Jeff are employed by Magnum Electronics, a locally owned and operated electronics retail store.
What are your thoughts on the three proposals outlined above, and please feel free to suggest anything that you feel should also be considered in reducing the deficit.
In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, the estimated fixed cost element of power costs is
the abcd partnership has the following balance sheet at january 1 2013 prior to the admission of new partner eden.cash
Prepare the appropriate journal entries to remove the equipment from the books of Faster Company on March 31, 2017
Consider the appropriate classification of these long-term debt obligations. Assuming no more long-term debt will be issued, what are the implications of the information above for Border's liquidity and solvency risk in 2013 and the following year..
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