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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 = 1000
elaborate for: PV = VB = ?
PV = $928.39 Answer

(5-2) Yield to matureness for Annual Payments
Using 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) Maturity 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 following:
N = 5, PMT = 80, and FV = 1000
Current yield = Annual interest/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 2nd Investment
Total $75,000
($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4)=
= 1.12 Answer

(6-2) take Rate of Return
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 dec to 8%:
ri = rRF + (rM - rRF)bi = 8% + (13% - 8%)1.3 = 14.5%.
c. 1. rM inc 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 companys beta were to picture the expected return will not double callable to the fact an adjoin in beta will increase a companys expected return by an amount which is equal to the market risk premium multiplication the change in beta.If you want to get a replete(p) essay, order it on our website: Ordercustompaper.com



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