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##### Please work step by step. Chapter 4, problems 4-2...

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Please work step by step. Chapter 4, problems 4-2, 4-6, 4-9 (a,b,c), 4-10 (a,b,c,d) 4-2. What is the present value of a security that will pay $5,000 n 20 years if securities of equal risk pay 7% annually? 4-6. What is the future value of a 7%, 5 year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be? 4-9. Find the following values using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. A. An initial $500 compounded for 1 year at 6% B. An initial $500 compounded for 2 years at 6% C. The present value of $500 due in 1 year at a discount rate of 6% 4-10. Use both the TVM equations and a financial calculator to find the following values. A. An initial $500 compounded for 10 years at 6% B. An initial $500 compounded for 10 years at 12% C. The present value of $500 due in 10 years at a 6% discount rate D. The present value of $500 due in 10 years at a 12% discount rate Chapter 5, problems 5-1, 5-6, 5-9 (a,b). 5-1. Jackson Corporation?s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds? 5-6. The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2 year Treasury security yields 6.3%. What is the maturity rick premium for the 2 year security? 5-9. The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S has a matury of 1 year. A. What will be the value of each of these bonds when the going rate of interest is (1) 5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment to be made on Bond S. B. Why does the longer-term (15 year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)? Chapter 6, problems 6-2, 6-3, 6-6 (a,b) 6-2. Assume that the risk free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? 6-3. Assume that the risk free rate is 5% and that the market risk premium if 6%. What is the required return on the market, on a stock with a beta of 1.0, and on a stock with a beta of 1.2? 6-6. Suppose rRF=5%, rM= 10%, and rA= 12%. A. Calculate Stock A?s beta. B. If Stock A?s beta were 2.0, then what would A?s new required rate of return?

Paper#11831 | Written in 18-Jul-2015

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