FIN 534 FIN534 HOMEWORK SET 2 ANSWERS / 2020 (STRAYER)
Strayer FIN 534 Homework Set 2 - 2020 Solution
Assume that you are nearing graduation and have applied for a job with a local bank. The
bank’s evaluation process requires you to take an examination that covers several financial
analysis techniques. The first section of the test asks you to address these discounted cash
flow analysis problems:
1. What is the present value of the following uneven cash flow stream −$50, $100, $75, and
$50 at the end of Years 0 through 3?
2. Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted)
interest rate of 11.33463%, with interest added (compounded) daily. How much will you have
in your account on October 1, or 9 months later?
3. What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that
sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a
premium tell you about the relationship between rd and the bond’s coupon rate?
4. What are the total return, the current yield, and the capital gains yield for the discount bond
in Question #3 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the
company does not default on the bond.)
Comments
Post a Comment