1) What is the annual interest expense Brussels Inc. will have to pay in cash each year with a market rate of 6%? With a market rate of 20% 6% = $120,000. 20% = $400,000 2) Calculate the cash proceeds of the bond sale if the market rate is 6%. Show your work. Yearly Semi-annually Coupon Rate 8% Market Rate 6% 3% N 5 10 PV Annuity (Interest) Interest: Semi-annual interest payments * PV Factor $80,000*8.53020 $ 682,416 PV Single Sum (Principal) Principal:
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obvious. While one can make estimates for the risks and include them as suggested, it is clear that the Eurobond option exposes the firm to higher economic/political and exchange rate risks. It also requires that funds be repatriated to pay off the bonds, while with the bank
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复旦大学管理学院院 投资学期末考试试卷 样品 课程名称：__投资学 _________ 课程代码： MANA130029.01____________ 开课院系：__管理学院财务金融系____ 考试形式：闭卷 姓 名： 学 号： 专 业： |题 号 |1 |2 |3 |4 |5 |总 分 | |得 分 | | | | | | | (以下为试卷正文) 一、选择题 （60分）Multiple choices （60 point, one point each） 1. 资本配置线可以描述为 A) 投资机会集由一个无风险资产和一个风险资产构成 B) 投资机会集由两个风险资产构成 C) 上面每个点对某个投资者来说效用都一样
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My portfolio in elementary algebra Submitted By: Valenzuela city science high school Submitted to: Mr.timothy a. acana Linear equations in two variables Forms for 2D linear equations Linear equations can be rewritten using the laws of elementary algebra into several different forms. These equations are often referred to as the "equations of the straight line." In what follows, x, y, t, and θ are variables; other letters represent constants (fixed numbers). General form where A and B are
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Pedersen 2 Interest-Rate Sensitivity First order effect: Bond prices and yields are negatively related Maturity matters: Prices of long-term bonds are more sensitive to interest-rate changes than short-term bonds Convexity: An increase in a bond’s YTM results in a smaller price decline than the price gain associated with a decrease of equal magnitude in the YTM. Prof. Lasse H. Pedersen 3 Duration The duration (D) of a bond with cashflows c(t) is defined as minus the elasticity of
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CHAPTER 2 FINANCIAL MARKETS AND INSTITUTIONS 1. You recently sold 100 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction? a. This is an example of a direct transfer of capital. b. This is an example of a primary market transaction. c. This is an example of an exchange of physical assets. d. This is an example of
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inflation is going up existing bonds, with given nominal values and coupons, do not offer a yield that compensates for inflation (r = real rate + expected inflation). Thus, demand is lowered and prices of bonds fall until they offer the required yield. In addition, if prices are expected to go up it makes sense to consume today (incl. buying capital goods) before prices increase. For business today’s bonds have a low real yield, why it is profitable to increase the supply of bonds and invest more. They will
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Merit Enterprise Corp. Sara Lehn, chief financial officer of Merit Enterprise Corp., was reviewing her presentation one last time before her upcoming meeting with the board of directors. Merit�s business had been brisk for the last two years, and the company�s CEO was pushing for a dramatic expansion of Merit�s production capacity. Executing the CEO�s plans would require $4 billion in capital in addition to $2 billion in excess cash that the firm had built up. Sara�s immediate task was to brief the
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Corporation: Bond Accounting In December 2008 Rene Cook sat in her cubicle trying to remember what she had learned in business school about bonds and bond accounting. Ms. Cook, a new MBA and special assistant in a training assignment with the company president, had just met with David Lyons, president of Lyons Document Storage Corporation. He had asked her to think about the possible consequences of repurchasing company bonds outstanding using cash that he felt could be obtained by issuing new bonds with
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ACCT 504 WEEK 6 CASE STUDY 3 – CASH BUDGETING – LBJ COMPANY A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=week-6-case-study-3-cash-budgeting-lbj-company Visit Our website: http://hwsoloutions.com/ Product Description ACCT 504 Week 6 Case Study 3 – Cash Budgeting – LBJ Company, What are the three sections of a Cash Budget, and what is included in each section? 1. The cash receipts section includes expected receipts from the company’s principal source(s) of cash. It
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