Bond Valuation 5-1 Pg 210

Week 3 Pg 210-211 5-1 Bond Valuation with Summary Payments (N = 12; I/YR = YTM = 9%; PMT = 0.08 × 1,000 = 80, FV = 1000) PV = 928.39 5-2 Yield to maturity date for periodical Payments (N = 12; PV = -850; PMT = 0.10 × 1,000 = 100; FV = 1000) YTM = 12.48% 5-6 Maturity Risk Premium r* = 3%; IP = 3%; rT-2 = 6.3%; rT-2 = r* + IP + MRP = 6.3% rT-2 = 3% + 3% + MRP = 6.3% MRP = 0.3% 5-7 Bond Valuation with Semi Annual Payments (N = 16; I/YR = 8.5/2 = 4.25; PMT = 50; FV = 1000) PV=1,085.80 5-13 Yield to Maturity and circulating(prenominal) Yield N = 5, PMT = 80, and FV = 1000 Current yield = Ann occupy/Current price 0.0821 = $80/PV PV = $80/0.0821 = $974.42 (N = 5, PV = -974.42, PMT = 80, and FV = 1000) = 8.65% 6-6 Double of import pg 257 If a orders important were to forficate, would its expected stop double? If a callers beta were to double the expected descend wouldnt because an increase in beta would increase a compa nys expected return only by the standard equal to the market stake premium multiplied by the change in the beta amount. Pg 258-259 6-1 Portfolio Beta An individual has $35,000 invested in a hold with a beta of 0.8 and another $40,000 invested in a stock with a beta of 1.4. If these are the only devil investments in her portfolio, what is her portfolios beta?

$35,000 0.8 1st Investment, 40,000 1.4 2nd Investment totality $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 need Rate of Return Assume that the risk-free prize is 6% and that the expected return on the market is 13%. What is the required rate of return! on a stock that has a beta of 0.7? rRF = 6%; rM = 13%; b = 0.7; sour for : rs = ? rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% 6-7 Required Rate of Return Suppose rRF = 9%, rM = 14%, and bi = 1.3. a.What is ri, the required rate of return on Stock i? a. ri = rRF + (rM - rRF)bi = 9% + (14% - 9%)1.3 = 15.5%. b. 1. rRF inc to 10%: ri = rRF + (rM - rRF)bi =...If you origin to get a full essay, order it on our website: OrderCustomPaper.com

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