Under the terms of a divorce agreement entered into in 2018, Kim was to pay her husband Tom $7,000 per month in alimony, Kim's p
1 answer:
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Answer:
at 13% --> $1,000
at 17% -->$806.54
at 10% --> $1,194.85
When the rates do not match people will only accept the bond if their desired market return can be acheive. Because, the coupon payment are fixed the only way to do so is by changing the price ofthe bond.
So bond with coupon rate above market are trade at a price higher than face value while, below market traded at lower price.
Explanation:
The market value of a bond is the present value of the future coupon payment and maturity given the current market rate
When the market rate matches the coupon rate then the bond is at par and sales at face value.
C 130.000
time 11
rate 0.17
PV $628.7337
Maturity 1,000.00
time 11.00
rate 0.17
PV 177.81
PV c $628.7337
PV m $177.8097
Total $806.5435
C 130.000
time 11
rate 0.1
PV $844.3579
Maturity 1,000.00
time 11.00
rate 0.1
PV 350.49
PV c $844.3579
PV m $350.4939
Total $1,194.8518
Answer:
Portfolio Mean = 7.2%
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%
Explanation:
The mean return of a portfolio consisting of two securities can be calculated by multiplying the weight of each security in the portfolio by the mean return of that security and adding the products for each security. The formula for two asset or security portfolio return (mean) can be written as follows,
Portfolio Mean = wA * rA + wB * rB
Where,
- w represents the weight of each security
- r represents the mean return of each security
Portfolio Mean = 60% * 8% + 40% * 6%
Portfolio Mean = 7.2%
The standard deviation is a measure of the total risk. The standard deviation of a portfolio consisting of two securities can be calculated using the attached formula.
Portfolio Stdev = √(0.6)² (0.2)² + (0.4)² (0.15)² + 2(0.6) (0.4) (-0.3) (0.2) (0.15)
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%
