Investment After-inflation return Emerging stock market stocks 11.5% Small-company U.S. stocks 9.0% European and Asian stocks 8.2% S&P 500 Index (large U.S. stocks) 7.2% Art 4.0% Residential real estate 2.8% U.S. Corporate bonds 0.9% Long-term U.S. government bonds 0.4% Silver -0.3% (a) If you invest $10‚000 each year for the next 30 years in small-company stocks how much would you retire with (before taxes)? (b) Suppose you wanted to retire with enough to buy a 1‚000 acre spread in the
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The main sources of finance for many companies are external sources of funds that carry financial liabilities. These may be sub-divided into two. Firstly‚ there are non-marketable debt such as bank loans and marketable debt such as corporate bonds. All other things being equal‚ debt finance should be cheaper for a corporation than the other main form of long-term finance‚ equity. This is because debt finances tends to come with a definite obligation that
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you can get in normal conditions in the sale thereof‚ the intrinsic value is when you divide the net assets in shares payable. What is the difference between the par value of a bond and the market value of a bond? The par value of a bond issued to entities so they can carry out their activities in the market but these bonds win or lose value depending on the prevailing interest rate at the time to give them‚ the fulfillment of the commitment not to pay them. Explain the difference between the bond’s
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= Liabilities + Equity Date Cash Bond Payable Interest Payable Interest Expense +300‚000 +300‚000 (a) Jan 1 -12‚000 -12‚000* (b) July 1 +12‚000 -12‚000 (C) Dec 31 *(R$300‚000 X 8% X 1/2) = 12‚000 E 10-10 (a) 1. Assets = Liabilities + Equity Date Cash Bond Payable Discount on B/P +485‚000 +500‚000 -15‚000 2. Semiannual interest payments ($20‚000* X 10) $200‚000 Plus: bond discount 15‚000 Total cost of
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SHOULD RETAIL INVESTORS INVEST IN INDEX TRACKER FUNDS RATHER THAN ACTIVELY MANAGED FUNDS? Introduction: This essay sets out to know which type of investment fund is better for a retail investor. By this‚ we will consider the meaning and operations of an index tracker fund‚ as well as that of the actively managed funds. Furthermore‚ identify the advantages of index tracker funds over actively managed funds and draw conclusions in relation to the topic above. What is an index? An index is
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following factors would increase the likelihood that a company would call its outstanding bonds at this time? (a) The yield to maturity on the company’s outstanding bonds increases due to a weakening of the firm’s financial situation. (b) A provision in the bond indenture lowers the call price on specific dates‚ and yesterday was one of those dates. (c) The flotation costs associated with issuing new bonds rise. (d) The firm’s CFO believes that interest rates are likely to decline in the future
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assumptions (if any). Please type your answers. 1. Use the following corporate bond price quote information to answer the questions that follow. Assume the company makes semi-annual coupon payments and also assume the bond matures on today’s date (May 28) in its maturity year. Note that price is expressed in percentage of par value. Company XYZ Inc. Coupon 7.000 Maturity May. 28‚ 2017 Price 97.667 Yield a. How much would this bond cost you to buy today if its par value is $1000? b. What is the bond’s
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F600 Summer 2013 Assignment 1 Show your work‚ please. Assignment is due in class: For Tuesday Daytime and Evening Sections on May 28th‚ 2013 For Wednesday Daytime Section on May 29th‚ 2013 I need only one write-up back from each group with the first‚ last name‚ and your student ID numbers of students forming the group. To eliminate free riding‚ please put names of only those students in the group who actually worked and contributed to the group assignment. Those who have not contributed
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exactly the same as 12.21 Historically‚ most Eurobonds have been ________ denominated. a. U.S. dollar b. yen c. euro d. pound 12.25 Debt denominated in a foreign currency that is launched‚ priced and traded in Asia is referred to as a _________ bond. a. shogun b. samurai c. Asian-tiger d. dragon 12.26 Which one of the following factors does NOT promote well-functioning financial markets? a. secure property rights b. high tariffs c.
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2‚ 3‚ 4‚ 7‚ 12‚ & 25 1. Bond Yields. A 30-year Treasury bond is issued with face value of $1‚000‚ paying interest of $60 per year. If market yields increase shortly after the T-bond is issued‚ what happens to the bond’s a. coupon rate? The fixed rate is 6% and will not change the $60 per year. b. price? Price is dependent upon the market interest rate. If the market interest rate goes up‚ the bond price goes down; if the interest rate goes down‚ the price of the bond must increase. c. yield
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