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(5-1) Bond Valuation with Summary Payments victimization financial electronic computer: N = 12; I/YR = YTM = 9%; PMT = 0.08 × 1,000 = 80, FV = one hundred0 elaborate for: PV = VB = ? PV = $928.39 assist (5-2) fork out to matureness for one-year Payments utilise financial calculator: N = 12; PV = -850; PMT = 0.10 × 1,000 = 100; FV = 1000; Solve for: I/YR = YTM = ? YTM = 12.48% Answer (5-6) matureness Risk Premium r* = 3%; IP = 3%; rT-2 = 6.3%; Solve for: MRP2 = ? rT-2 = r* + IP + MRP = 6.3% rT-2 = 3% + 3% + MRP = 6.3% MRP = 0.3% Answer (5-7) Bond Valuation with Semi Annual Payments N = 16; I/YR = 8.5/2 = 4.25; PMT = 50; FV = 1000. Solve for PV Using financial calculator or Excel: PV= $1,085.80 Answer (5-13) Yield to Maturity and reliable Yield Solve for the YTM, given the quest: N = 5, PMT = 80, and FV = 1000 Current yield = Annual hobby/Current price 0.0821 = $80/PV PV = $80/0.0821 = $974.42 Solve for the YTM: N = 5, PV = -974.42, PMT = 80, and FV = 1000. Solve for I/YR = YTM = 8.65% Answer (6-1) Portfolio Beta $35,000 0.8 beginning(a) Investment, 40,000 1.4 second Investment Total $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4)= = 1.12 Answer (6-2) take Rate of buy the farm rRF = 6%; rM = 13%; b = 0.7; Solve for : rs = ?

rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% Answer (6-7) Required Rate of Return a. ri = rRF + (rM - rRF)bi = 9% + (14% - 9%)1.3 = 15.5%. b. 1. rRF inc to 10%: ri = rRF + (rM - rRF)bi = 10% + (15% - 10%)1.3 = 16.5%. b. 2. rRF decline to 8%: ri = rRF + (rM - rRF)bi = 8% + (13% - 8%)1.3 = 14.5%. c. 1. rM i nc to 16%: ri = rRF + (rM - rRF)bi = 9% + (! 16% - 9%)1.3 = 18.1%. c 2. rM dec to 13%: ri = rRF + (rM - rRF)bi = 9% + (13% - 9%)1.3 = 14.2%. (6-6) Double Beta If a caller-outs beta were to picture the expected deliver will not double callable to the fact an encounter in beta will increase a companys expected return by an amount which is fitting to the market risk premium multiplication the change in beta.If you want to get a replete(p) essay, order it on our website: BestEssayCheap.com

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