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Consider a bond (with par value = $1,000) paying a coupon rate of 7% per year semiannually when the market interest rate is only 5% per half-year. The bond has 3 years until maturity.
a. Find the bond's price today and 6 months from now after the next coupon is paid. (Round your answers to 2 decimal places.
Current price ? Price after six months?
b. What is the total (6-month) rate of return on the bond?
The ABC Corp. has a stated policy of distributing 40% of its annual profits to its shareholders as an annual dividend payment. Historically, ABC has produced a return on equity of 18%, and it is presumed that this level will be maintained for the for..
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What is the value of an account ten years from now, which has an opening balance of $500, to which you contribute $50 per month, and which grows at a 7.5% annualized rate? Given the answer in Q1, above, if you reinvest the amount into an annuity paid..
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