1) A $1,000 par value bond, paying $50 semiannually, with an 8 percent yield to maturity and five years remaining to maturity should sell for ________.
2) Your investment has a 40% chance of earning a 12% rate of return, a 50% chance of earning an 8% rate of return, and a 10% chance of losing 3%. What is the standard deviation of this investment?
3) You purchased a share of stock for $59. One year later you received $5.25 as a dividend and sold the share for $58. Your holding-period return was _________.
4) An insurance company purchases corporate bonds in the secondary market with six years to maturity. The total par value is $55 million. The coupon rate is 11 percent, with annual interest payments. If the expected required rate of return in 4 years is 9 percent, what will the market value of the bonds be then?
1) A $1,000 par value bond, paying $50 semiannually, with an 8 percent yield to maturity and five years remaining to maturity should sell for ________.
2) Your investment has a 40% chance of earning a 12% rate of return, a 50% chance of earning an 8% rate of return, and a 10% chance of losing 3%. What is the standard deviation of this investment?
3) You purchased a share of stock for $59. One year later you received $5.25 as a dividend and sold the share for $58. Your holding-period return was _________.
4) An insurance company purchases corporate bonds in the secondary market with six years to maturity. The total par value is $55 million. The coupon rate is 11 percent, with annual interest payments. If the expected required rate of return in 4 years is 9 percent, what will the market value of the bonds be then?
