What is the most that an investor should be willing to pay

Assignment Help Financial Econometrics
Reference no: EM13328026

suppose that the risk-free rate is currently 9% per annum(quoted as an APR). You read of a strange security that offers a risk-free payoff of 10$ per month for the next 5 years. Then exactly one year later after the final 10$ payment, the investment will make the first of 5 annual payments in the amount of 100 each. What is the most that an investor should be willing to pay for this security at this moment(one month before the first payoff)? At what price should the security sell after one year of monthly payments has elapsed?

Reference no: EM13328026

Questions Cloud

How much would have to put away each year to reach goal : How much would you have to put away each year to reach your goal, assuming you're starting from zero now and you earn 5% annual interest on your investment
Explain mixtures of helium and oxygen are used in scuba : Mixtures of helium and oxygen are used in scuba diving tanks to help prevent "the bends". For a particular dive, 18.9 L of oxygen gas at 25.0oC and 1.25 atm, and 7.58 L of helium gas at 25.0oC and 1.13 atm were pumped into a tank with a volume of ..
Identify three issues that must be addressed specific : Identify three issues that must be addressed specific to properties that sell alcohol versus those that do not.
What is the mass of water vapor in the room : A room with dimensions 10 x 10 x 20 meters is filled with air at 20 degrees C, 101 kPa and relative humidity 0.8. What is the mass of water vapor in the room, in units of kg
What is the most that an investor should be willing to pay : suppose that the risk-free rate is currently 9% per annum(quoted as an APR). You read of a strange security that offers a risk-free payoff of 10$ per month for the next 5 years
Define compounds in order of lowest to highest melting point : Rank the following compounds in order of lowest to highest melting point. KCl CH3-O-CH3 CH3-CH2-CH3 CH3-CH2-NH2
Calculate what is the new required price to control : The hospital is facing pressure from public-interest groups to control the prices it charges to the uninsured. Assume that the hospital is able through various efficiencies to cut its per-visit cost by 5%.
Apply all information need for each yarn : Mount all Yarns to a research sheet. Apply all information need for each yarn.
Determine the speed the child will have at the bottom of arc : A 75- kg child sits in a swing suspended with 3.2- m-long ropes. Use conservation of energy to determine the speed the child will have at the bottom of the arc when she is let go

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Compute the maximum change in total deposits

Compute the maximum change in total deposits that would result if deposits at financial institutions were immediately increased by 120 billion and the reserve requirement was 5 percent.

  Describe is tiaa-cref an ordinary shareholder

Investors generally can make one vote for each share of stock they hold. TIAA-CREF is the largest institutional shareholder in the United States; therefore it holds many shares and has more votes than any other organization.

  Determine what is the sustainable rate of growth

Stop and Go has a 5 percent profit margin and a 44 percent dividend payout ratio. The total asset turnover is 1.66 and the debt-equity ratio is .50. What is the sustainable rate of growth

  How long should owner wait to save the entire amount

A restaurant owner wants to buy new kitchen equipment for $25,000. He would like to pay for it through saving up $2,000 a week in a fund that pays 10% interest compounded monthly.

  Prepare a capital budget for the items to be acquired

The expected lifetime of the various capital items is 10 years for the garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center.

  What are mergers and acquisitions

What are mergers and acquisitions, why do companies merge and how can a merger occur

  How much would be willing to lend the business owner

A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $1,250 per month for the next 3 years and then $500 per month for two years after that.

  Determine what is the present value of the cash flow stream

A large networking company wants to incorporate your software into their systems and is offering to pay you $511,000 today, plus $511,000 at the end of each of the following six years for permission to do this.

  How many units must firm sell to earn in operating profit

A firm with $49,000 in fixed costs breaks even on unit sales of 7,000, how many units must the firm sell to earn $30,000 in operating profit

  What conditions must a persons preferences meet in order

In the Rational Choice paradigm, what conditions must a person's preferences meet in order for us to consider them a rational person

  Determine what is the accounts receivables turnover rate

Walther Enterprises has accounts receivable of $52,700, total assets of $269,250, cost of goods sold of $147,900 and a capital intensity ratio of 1.25. What is the accounts receivables turnover rate

  Determine what is the profitability index for the project

If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project

Free Assignment Quote

Assured A++ Grade

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