Reference no: EM131204182
Assume that you are nearing graduation and have applied for a job with a local bank. The bank's evaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test asks you to address these discounted cash flow analysis problems:
1. What is the present value of the following uneven cash flow stream -$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually.
2. We sometimes need to find out how long it will take a sum of money (or something else, such as earnings, population, or prices) to grow to some specified amount. For example, if a company's sales are growing at a rate of 20% per year, how long will it take sales to double?
3. Will the future value be larger or smaller if we compound an initial amount more often than annually-for example, every 6 months, or semiannually-holding the stated interest rate constant? Why?
4. What is the effective annual rate (EAR or EFF%) for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
5. Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted) interest rate of 11.33463%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?
Use the following information for Questions 6 and 7:
A firm issues a 10-year, $1,000 par value bond with a 10% annual coupon and a required rate of return is 10%.
6. What would be the value of the bond described above if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
7. What would happen to the bond's value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond?
8. What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a premium tell you about the relationship between rd and the bond's coupon rate?
9. What are the total return, the current yield, and the capital gains yield for the discount bond in Question #8 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.)
|
How much does total factor productivity grow
: Growth accounting. A country’s labor force grows 1.2 percent and its capital stock grows 3 percent. Assume that labor share of output is 0.25 and capital share of output is 0.75. If the economy grows 4.55 percent, how much does total factor productiv..
|
|
Respect to the three common forms of business ownership
: Describe how each of the following differ with respect to the three common forms of business ownership, (Sole Proprietorship, Partnership, and Incorporation):
|
|
Calculate market demand
: You’re given the following individual demand tables for comic books. Calculate market demand. If the current market price is $8, total market quantity demanded is Economic books.
|
|
Using millmans theorem find the current
: Repeat given Problem for the network of given figure (a). - Using Millman's theorem, find the current through and voltage across the resistor RL of given figure (b)
|
|
What would be the value of the bond described
: What would be the value of the bond described above if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
|
|
Identify methods of recording the crime scene
: Describe the preservation and collection of physical evidence. Describe the procedures for securing and searching the crime scene to include crime scene safety.
|
|
Would you provide the same arguments for violent crimes
: Should the welfare of tax evaders be included in an assessment of social welfare? What if their inclusion implied that tax evasion should not be punished? Would you provide the same arguments for violent crimes?
|
|
Manufactures general-purpose transducers invested
: A company that manufactures general-purpose transducers invested $2 million four years ago in high-yield junk bonds. If the bonds are now worth $2.8 million, what rate of return per year did the company make on the basis of (a) simple interest, and (..
|
|
Explore the legal rights and responsibilities of the tenant
: Determine whether or not Larry has legal grounds to evict Roger. Explain why or why not. Describe whether or not Roger has a legal obligation to pay for the damage he caused and determine whether or not Larry would be liable for any direct damage..
|