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Take 3 semi-annual coupon paying bonds with face values of $100. They carry 11.6 percent, 14.6 percent and 9.6 percent coupons, mature in ½ year, 1 year, and 1 ½ year, with current market prices of 103, 107, and 107, respectively. Find the "crude" (which does not use regression) term structure of discount factor, spot interest rate and forward interest rate.
Assume semi-annual compounding and write your answers for:
1. Half-year discount factor. 2. One-year discount factor. 3. One and half-year discount factor. 4. Half-year spot rate. 5. One-year spot rate. 6. One and half-year spot rate. 7. Forward rate for period (0.5 - 1.0) year. 8. Forward rate for period (1.0 - 1.5) year. 9. What is the current fair price of a 1.5 year bond with face value 100, carrying an annual coupon of 10 percent, paid two times per year? 10. What is the current fair price of a 1 year zero coupon bond with face value 100? 11. What is the current fair price of a 6-month strip with face value 100?
Kay Mart owns an annuity that will begin making semiannual payments of $7500 in perpetuity to her or her heirs. The first payment will take place 3 years and 6 months from today. She is considering selling the annuity to an investor whose required..
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dividends payable to preferred. on december 31 20x4 arco company had 5000 shares of 10 par value 15 percent cumulative
The real risk free rate is 1.5%. Inflation is expected to be 2% for this year and next year, and 3% for every year thereafter. The maturity risk premium is expected to be 0.02 x (t-1)% where t = number of years to maturity. What is the yield on a ..
Watch the "Your Business Structure" and "Corporate Business Structures" videos on the Electronics Reserve Readings page. Identify the different business structures.
The bond makes no payments for the first six years, then pays $2,100 every six months over the subsequent eight years, and finally pays $2,400 every six months over the last six years. What is current price of Bond M?
What are examples of unusual or dysfunctional costing information that has been seen and/or decisions made using that costing information?
source ltd is currently considering a major capital investment project for which additional finance will be required.
On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.
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