« previous next »

Author Question: The four steps to determining the price of a bond are: A) determine the amount and timing of the ... (Read 79 times)

jerry coleman

  • Hero Member
  • *****
  • Posts: 570
on: Jul 10, 2018
The four steps to determining the price of a bond are:
 
  A) determine the amount and timing of the present cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and add the PVs of the principal and coupons.
  B) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the future value of the lump-sum principal and the annuity stream of coupons, and add the FVs of the principal and coupons.
  C) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and multiply the PVs of the principal and coupons.
  D) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and add the PVs of the principal and coupons.

Question 2

You own a portfolio that is equally invested in three assets:
 
  (1 ) the risk-free asset; (2 ) Stock 1; and (3 ) Stock 2. Stock 1 has a beta of 1.9 and the portfolio has the same risk as the market portfolio.
  What is the beta of Stock 2 in the portfolio?
  A) 1.0
  B) 1.1
  C) 1.2
  D) 1.3
  E) 1.4


yuyiding

  • Sr. Member
  • ****
  • Posts: 357
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates's recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

According to the American College of Allergy, Asthma & Immunology, more than 50 million Americans have some kind of food allergy. Food allergies affect between 4 and 6% of children, and 4% of adults, according to the CDC. The most common food allergies include shellfish, peanuts, walnuts, fish, eggs, milk, and soy.

Did you know?

Most women experience menopause in their 50s. However, in 1994, an Italian woman gave birth to a baby boy when she was 61 years old.

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

Formation of phosphodiester bond Formation of phosphodiester bond
A single overhead camshaft engine with a timing belt that also rotates the water pump. A single overhead camshaft engine with a timing belt that also rotates the water pump.
How to determine if a function is even or odd How to determine if a function is even or odd
Determining the order and rate constant of an irreversible first-order reaction Determining the order and rate constant of an irreversible first-order reaction
Covalent bond Covalent bond
Determine the legnth of x to the nearest tenth of a metre Determine the legnth of x to the nearest tenth of a metre
Video: Introduction to filtration - filtrate formation and composition

For a complete list of videos, visit our video library