Consider a bond that pays coupon interest of $45 at the end of each six month period and that has a face value of $1000. The bond will mature twenty years from today. The appropriate discount rate, based on today’s capital market opportunities, is a simple rate of 7% per year, with semiannual compounding. (a) What is today’s market value of this bond? (b) Explain intuitively why the bond’s current market value differs from its $1000 face value. (c) Suppose that this bond paid coupon interest in the amount of $90 at the end of each year instead of $45 at the end of each six month period. (Note, the Excel spreadsheet will no longer give the correct answer without modification, since it assumes semiannual payments). Effective market interest rates are the same as in part (a) — we are changing the characteristics of this bond, not rates that are available on alternative investments. Recompute the value of the bond, and explain intuitively why the answer differs from that obtained in part (a). Hint: today’s value of the future payment of the bond’s face value should be the same as in part (a), because nothing about this payment has changed.

## What is the short future position initiallyWhat's the short future position initially? What's the profit from the future trade as sliver price decline to $18? |

## How would the size of the multiplier affect the slopeHow would the size of the multiplier affect the slope of the IS curve?- if the aggregate expenditure line shifts in the 45°-line diagram, must the IS curve shift also? Briefly explain. |

## Why are they nearly impossible to predict"It is in the nature of black-swanlike events that they are near-impossible to predict." What are black swan events? Why are they nearly impossible to predict? |

## Sensitivity analysis is often used when forecasting revenueSensitivity analysis is often used when forecasting revenue. When revenue is forecasted in multiple levels, the most common forecasts are in: |

## The effective annual yield on a one-year zero coupon bondThe effective annual yield on a one-year zero coupon bond is 7% and the effective annual interest rate on a two-year zero coupon bond is 8%. You are able to arrange a one-year forward investment at rate i for a one-year period. |

## Blue water systems is analyzing project with cash flowsBlue Water Systems is analyzing a project with the following cash flows. Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent? Why or why not? |

## Which projects should empire acceptWACC Empire Electric Company (EEC) uses only debt and common equity. Which projects should Empire accept? |

## Planning to take three-year leave of absenceSaving For Leave Of Absence. Professor dCarufel is planning to take a three-year leave of absence, |

## Fisher effect-what would be the approximate real rateFor a nominal interest rate of 12% and inflation of 4%, according to the Fisher Effect, what would be the approximate real rate? |

## Compute the standard deviation of monthly returnsThe past five monthly returns for Kohl’s are 3.90 percent, 4.52 percent, −2.04 percent, 9.43 percent, and −2.92 percent. Compute the standard deviation of Kohls’ monthly returns. |

## How did the merchant come out on the bookcaseIf the bookcase sold at this price, how did the merchant come out on the bookcase? |

## Same company cost of capital for evaluating all projectsIf a firm uses the same company cost of capital for evaluating all projects which of the following is likely? |

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