markets in finance is that they perform crucial functions of facilitating capital information in the economy. Secondary market which is also called aftermarket is the financial market in which previously issued financial instruments such as stocks, bonds, futures and options are bought and sold. One example is the loans that are sold by a mortgage bank to investors such as Freddie Mac. Their role in finance is to offer sellers the advantage of effectively reducing the purchase price of products and
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Homework for Unit 3 Homework: 5-2, 6-6, and 6-10 5-2 Pg. 210 Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity? INT = (Coupon rate)(Par value) = (.10)(1000) = 100 VB = INT [1/rd – 1/rd(1 + rd)N] + M/(1 + rd)N = 100[1/.10 – 1/.10(1 + .10)12] + 1000/(1 + .10)12 = 100[1/.10 – 1/.313843] + 1000/3
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Available ONLINE www.vsrdjournals.com VSRD-IJBMR, Vol. 2 (4), 2012, 167-178 RESEARCH COMMUNICATION RESEARCH COMMUNICATION A Study of Opportunities and Challenges for Mutual Fund in India : Vision 2020 1 Sarish* ABSTRACT In this paper, I have undertaken a study on mutual funds. The mutual fund sectors are one of the fastest growing sectors in Indian Economy and have awesome potential for sustained future growth. Mutual funds make saving and investing simple, accessible, and affordable
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information on the organizations most recent financial statements. Corporate debt Securities A debt security in finance is when a lender such as a bank or corporation lends money to an interested party looking for financial gain in the form of bonds. Debt securities are interesting because they serve the purpose of creditors who loan money to a borrower and accrue interest to sell them. They have value. For example, a creditor creates a binding agreement with a borrower listing all the financial
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Theory Covariance: how close two variables move Together The reward-to-volatility = sharpe ratio Serial correlation of daily returns is close to zero => very hard to predict from their past Value-at-Risk (VaR): a measure of downside risk ->Measures the potential loss over a specified horizon such that there is a (low) probability α that the actual loss will be larger No clear guidelines as to the choice of sample length m: small m means that the VaR will be more influenced by recent
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stock with a beta of 4.5? Ans – 3.31 2. PNB Industries has 20 million shares of common stock outstanding with a market price of $18.00 per share. The company also has outstanding preferred stock with a market value of 50 million, and $500,000 bonds outstanding, each with face value $1,000 and selling at 97% of par value. The cost of equity is 15%, the cost of preferred is 12% and the cost of debt is 8.50%. If PNB’s tax rate is 40%, what is the WACC? Ans – 9.47% 3. A 2 – year Treasury security
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investor in stocks and bonds, wanted to increase his portfolio but wanted to minimize his tax liability on the income from the bonds. EE bonds, because Interest received on bonds is generally excludable from gross income. They are an accrual-type security, which means interest is added to the bond monthly and paid when you cash in the bond. This includes no state or local taxes on series ee bonds, as well as the opportunity to generate tax deferred earnings by exchanging the bonds for other types.
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A Summary of the case “Coping with Financial and ethical Risks at American International Group (AIG)” Background American International Group, Inc. is a company whose operation began back in 1919. It was established back then by Cornelius Vander Starr as an insurance agency in Shanghai, China. AIG left china in 1949 after Starr had established himself as the westerner the sell insurance to the Chinese people. AIG headquarters then shifted from china to New York City, which is still the
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Tutorial – Bonds Solutions Memo 1) Define the following terms: a. Most bonds contain a call provision, which gives the issuing corporation the right to call the bonds for redemption. The call provision generally states that if the bonds are called, the company must pay the bondholders an amount greater than the par value, a call premium.Redeemable bonds give investors the right to sell the bonds back to the corporation at a price that is usually close to the par value. If interest rates
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efficient markets. * Primary market - Market in which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. * Secondary market - Financial market where previously issued securities (such bonds, notes, shares) and financial instruments (such as bills of exchange and certificates of deposit) are bought and sold. All commodity and stock exchanges, and over-the-counter markets, serve as secondary markets which (by providing an avenue for resale)
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