# Finance Investment "Expert Only" 13

Finance Investment “Expert Only” 13

Assignment Attached.

Please submit your assignment with complete answers and show calculations.

Due 11/16/2015 @ 1800 EST

**Finance Investment Analysis**

Please submit your assignment with complete answers and show calculations.

*** Submit plagiarism check report with your assignment*** I will do this PART.

FROM BOOK — Reilly, F., & Brown, K. (2012). Investment analysis & portfolio management (10th ed.). Mason, OH: South-Western Cengage Learning.

LINK TO THE BOOK

http://dl.yazdanpress.com/BOOKS/MANAGEMENT/Investment_Analysis_and_Portfolio_Management(marked).pdf

**Chapter 18 – questions 1,2,4,5 (page 682).**

- Why does the present value equation appear to be more useful for the bond investor than for the common stock investor?

- What are the important assumptions made when you calculate the promised yield to maturity? What are the assumptions when calculating promised YTC?

- We discussed three alternative hypotheses to explain the term structure of interest rates. Briefly discuss the three hypotheses, and indicate which one you think best explains the alternative shapes of a yield curve.

- a. Explain what is meant by the term structure of interest rates. Explain the theoretical basis of an upward-sloping yield curve.

- Explain the economic circumstances under which you would expect to see an invertedyield curve.

- Define “real” rate of interest.

- Over the past several years, fairly wide yield spreads between AAA corporates and

Treasuries have occasionally prevailed. Discuss the possible reasons for this.

**Problems 1) b and 2)a & b (page 685).**

- Four years ago, your firm issued $1,000 par, 25-year bonds, with a 7 percent coupon rate and a 10 percent call premium.
- If these bonds are now called, what is the actual yield to call for the investors who originally purchased them at par?
- Assume that you purchased an 8 percent, 20-year, $1,000 par, semiannual payment bondpriced at $1,012.50 when it has 12 years remaining until maturity. Compute:
- Its promised yield to maturity
- Its yield to call if the bond is callable in three years with an 8 percent premium

**Complete the following questions:**

1) When will a bonds coupon rate, current yield and yield to maturity be equal to one another.

2) When should an issuing firm exercise a call provision on its’ outstanding bonds? Why?

3) IBM has a bond issue outstanding with 14 years to maturity. When originally issued the bond had a par value of $1,000, a stated coupon rate of 12% and 15 years to maturity. Currently, similar risk bonds in the market place are yielding 8%. What would you expect IBM’s bond to sell for today? Additionally, at such a price is the bond selling at a discount or a premium? Why?

4) You are looking to purchase a zero coupon bond. The bond has 10 years until maturity and you require an 8% annual rate of return. What should you pay for this bond?

5) You just purchased a bond for $974.42 that matures in 5 Years. The bond was originally issued at par and had an annual coupon rate of 10%. Calculate the current yield and yield to maturity on the bond you just purchased.

**5 %**discount on an order above

**$ 150**

Use the following coupon code :

2018DISC

**Category**: Homework Help