Questions from General Investment

Q: What is Vega’s geometric average return over the five-year period

What is Vega’s geometric average return over the five-year period? a. 7.85 percent b. 9.00 percent c. 15.14 percent

Q: According to the pure expectations theory of interest rates, how much

According to the pure expectations theory of interest rates, how much do you expect to pay for a five-year STRIPS on November 15, 2016? How much do you expect to pay for a two-year STRIPS on November...

Q: Consider the following spot interest rates for maturities of one, two

Consider the following spot interest rates for maturities of one, two, three, and four years. What are the following forward rates, where f1, k refers to a forward rate for the period beginning in o...

Q: Based on the spot interest rates in the previous question, what

Based on the spot interest rates in the previous question, what are the following forward rates, where fk,1 refers to a forward rate beginning in k years and extending for 1 year?

Q: Based on the spot rates in Problem 21, and assuming a

Based on the spot rates in Problem 21, and assuming a constant real interest rate of 2 percent, what are the expected inflation rates for the next four years?

Q: Ghost Rider Corporation has bonds on the market with 10 years to

Ghost Rider Corporation has bonds on the market with 10 years to maturity, a YTM of 7.5 percent, and a current price of $938. What must the coupon rate be on the company’s bonds?

Q: Great Wall Pizzeria issued 10-year bonds one year ago at

Great Wall Pizzeria issued 10-year bonds one year ago at a coupon rate of 6.20 percent. If the YTM on these bonds is 7.4 percent, what is the current bond price?

Q: Soprano’s Spaghetti Factory issued 25-year bonds two years ago at

Soprano’s Spaghetti Factory issued 25-year bonds two years ago at a coupon rate of 7.5 percent. If these bonds currently sell for 108 percent of par value, what is the YTM?

Q: For the bond referred to in Problem 14, what would be

For the bond referred to in Problem 14, what would be the realized yield if it were held to maturity? Data from Problem 14: A zero coupon bond with a 6 percent YTM has 20 years to maturity. Two year...

Q: LKD Co. has 8 percent coupon bonds with a YTM of

LKD Co. has 8 percent coupon bonds with a YTM of 6.8 percent. The current yield on these bonds is 7.4 percent. How many years do these bonds have left until they mature?