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An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year.
a. What will the value of each bond be if the going interest rate is 5%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 15 more payments are to be made on Bond L.
b. Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?
Six years ago the Singleton Company issued 20-year bonds with a 14% annual coupon rate at their $1,000 par value. The bond had a 9% call premium, with 5 years of call protection. Today Singleton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Explain why the investor should or should not be happy that Singleton called them.
Topic: Comparison of Sage 50 Accounting and at least one other accounting software package.(research paper at least 3 source and 2 pages)
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If an investor is seeking income during retirement, which asset allocation would be the most suitable for them. The investor has a conservative risk tolerance, anticipates 30+ years in retirement, and wants to minimize taxes.
You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.0 percent coupon bonds are selling at a price of $653.03. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answ..
A project requires an initial cash outlay of $95,000 and has expected cash inflows of $20,000 annually for 9 years. The cost of capital is 10%. What is the project’s IRR?
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During the year just ended, Sherig Distributors, Inc had pretax earnings from operations of $487,000. In addition, during the year it received $26,000 in income from interest on bonds it held in Zig Manufacturing and received $26,000 in income from d..
“If the efficient-market hypothesis is true, the pension fund manager might as well select a portfolio with a pin.” Explain why or why not this is true.
The Wildwood Fund sells Class A shares with a front-end load of 5% and Class B Shares with 12b-1 fees of 6.0% annually but no load. If you plan to sell the fund after 7 years, are Class A or Class B shares the better choice? Assume a 15% annual retur..
consider the following data for abc enterprises all numbers in euro today is january 1 2013 income statement for 2012
The key to efficient diversification is to build a portfolio of securities that are:
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