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____1.The present value of an annuity will be decreased by ____2.You have borrowed $130,000 to buy a new motor home. Your loan is to be repaid over 15 years at 8% compounded monthly Calculate the...

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____    1.    The present value of an annuity will be decreased by
____    2.    You have bo
owed $130,000 to buy a new motor home. Your loan is to be repaid over 15 years at 8% compounded monthly Calculate the principal paid to the bank in month 2 of the loan.
____    3.    A car loan that charges 1.25% interest per month has an annual percentage rate of
____    4.    Alabama Power has prefe
ed stock that pays an annual dividend of $9.44. If the security has no maturity, what is its value to an investor who wishes to obtain a 9 percent rate of return?
____    5.    If you owe $1,200.00, which is the most advantageous way to pay it back assuming a 12% APR discount rate?
____    6.    Which of the following $1,000 face value bonds has a 10% yield, assuming semiannual coupon payments of 8%?
1) a 5 year maturity bond selling for $964.54
2) a 10 year maturity bond selling for $875.39
3) a 20 year maturity bond selling for $828.36
____    7.    When interest rates decrease, what happens to the bond prices of seasoned issues (assume the coupon rate is fixed)?
____    8.    How is prefe
ed stock similar to bonds?
____    9.    Nearly all prefe
ed stock comes with the right to receive all past unpaid dividends before common shareholders can receive any dividends. This right is refe
ed to as:
____    10.    The efficient market hypothesis asserts that:
____    11.    The cu
ent price of Zebar is $32.00 and its last dividend was $.60. What is its return if dividends are expected to grow indefinitely at 8 percent?
    12.    You have been assigned to estimate the interest rates that your company may have to pay when bo
owing money in the near future. The following information is available.
kPR = 2%
MR = .1% for a 1 year loan increasing by .1% for each additional yea
LR = .05% for a 1 year loan increasing by .05% for each additional yea
DR = 0 for a 1 year loan, .2% for a 2 year loan, increasing.1% for each additional yea
Expected Inflation Rates
XXXXXXXXXXYear 1 = 7%
XXXXXXXXXXYear 2 = 5%
XXXXXXXXXXYear 3 and thereafter = 3%
a.
Calculate the inflation adjustment (INFL) for a 5-year loan.
.
Calculate the appropriate interest rate for a 5-year loan.
    13.    One year ago a $1,000 face value, 6% coupon bond was selling for $1,100. Since then, the market yield has decreased by two percentage points. The bond pays interest semiannually and now has four years to maturity. What is the bond's price today?
Answered Same DayDec 09, 2021

Solution

Kushal answered on Dec 10 2021
53 Votes
Sheet1
        1
            The present value of the annuity will be decreased due to increase in the discount rate
        2    Laon Amount    130000                6                                                        12
            Number of periods    180                    1                2                3
            Interest rate annual    8%                        Tenure    5            Tenure    10            Tenure    20                Kpr    2%        Inflation Adjustment
            Monthly Interest rate    0.67%                        Price    964.54            Price    875.39            Price    828.36                MR    0.10%        Total inflation incremental    22.8%
                                        FV    1000            FV    1000            FV    1000                LR    0.05%
            Total Amount paid back    429899.792063302                        Coupon Rate    8%            Coupon Rate    8%            Coupon Rate    8%                DR            Annual Inflation    4.19%
            Interest amount    299899.792063302                        Frequency    2            Frequency    2            Frequency    2                Inflation            (Minimum amount the bond seller should charge for the inflation)
            Total installments    2388.3321781294                        Settlement date    12/10/19            Settlement...
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