Questions from General Investment

Q: A newly issued bond has a maturity of 10 years and pays

A newly issued bond has a maturity of 10 years and pays a 7% coupon rate (with coupon payments coming once annually). The bond sells at par value. a. What are the convexity and the duration of the bon...

Q: a. Use a spreadsheet to answer this question and assume the

a. Use a spreadsheet to answer this question and assume the yield curve is flat at a level of 4%. Calculate the convexity of a “bullet” fixed-income portfolio, that is, a portfolio with a single cash...

Q: General Weedkillers dominates the chemical weed control market with its patented product

General Weedkillers dominates the chemical weed control market with its patented product Weed-ex. The patent is about to expire, however. What are your forecasts for changes in the industry? Specifica...

Q: a. Computer stocks currently provide an expected rate of return of

a. Computer stocks currently provide an expected rate of return of 16%. MBI, a large computer company, will pay a year-end dividend of $2 per share. If the stock is selling at $50 per share, what must...

Q: OceanGate sells external hard drives for $200 each. Its total

OceanGate sells external hard drives for $200 each. Its total fixed costs are $30 million, and its variable costs per unit are $140. The corporate tax rate is 21%. If the economy is strong, the firm w...

Q: Institutional Advisors for All Inc., or IAAI, is a consulting

Institutional Advisors for All Inc., or IAAI, is a consulting firm that advises foundations, endowments, pension plans, and insurance companies. The members of the research department foresee an upwar...

Q: Mary Smith, a CFA candidate, was recently hired for an

Mary Smith, a CFA candidate, was recently hired for an analyst position at a large bank in London. Her first assignment is to examine the competitive strategies employed by various French wineries. Sm...

Q: Mary Smith, a CFA candidate, was recently hired for an

Mary Smith, a CFA candidate, was recently hired for an analyst position at a large bank in London. Her first assignment is to examine the competitive strategies employed by various French wineries. Sm...

Q: The market consensus is that Analog Electronic Corporation has an ROE =

The market consensus is that Analog Electronic Corporation has an ROE = 9%, a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year’s earnings were $3 per s...

Q: The FI Corporation’s dividends per share are expected to grow indefinitely by

The FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year. a. If this year’s year-end dividend is $8 and the market capitalization rate is 10% per year, what must the c...