Answer:
a) Upward-sloping yield curve
Explanation:
The U.S. Treasury yield curve describes the treasury bills, notes and bonds. The U.S. Treasury department issues treasury bills for less than a year. Treasury yield curves can predict market cycles. The risk free rate and inflation rates are anticipated to remain same, the only factor which can effect a yield curve is market risk premium therefore the yield curve will be upward sloping and flat curve.
Answer: D. a series of consecutive payments of equal amounts.
Explanation:
An annuity is a financial commodity that provides a fixed amount of payments, paid in equal periods, such as deposits made into savings accounts, monthly home mortgage payments, and monthly insurance payments.
Annuities are meant to be a safe way to secure a steady capital flow during people´s retirement years, as well as to avoid outliving their assets.
Answer:
0.8314
Explanation:
First, we are given the following
Unemployment during on Average = U= 12.7 weeks
Standard deviation= SD = 0.3 Weeks
Therefore, P (12 Greater than x Greater than 13)
= P (12-12.7 /0.3 Greater than X -U/SD Greter than 13-12.7/0.3)
= P (-0.7/0.3 Greater than Z Greater than 0.3/0.3)
= P (-2.33 Greater than Z Greater than 1)
= P (Z Greater than 1) - P (Z Greaer than -2.33)
At this Point we make use of he Z table to find out the figure
= 0.8413 - 0.0099
= 0.8314
Answer:
coupon interest rate that the company must set on the bonds in order to sell the bonds-with-warrants at par is 8.25%.
Explanation:
warrant per share = 2*75 = $150
price of the bond = 1000 - 150 - (1000/(1.05^40))
= $707.9543177
coupon*(1 -(1/(1.05^40)))/0.05 = 707.9543177
coupon*17.15908635 = 707.9543177
coupon = 41.25827583
coupon rate = 8.25%
Therefore, coupon interest rate that the company must set on the bonds in order to sell the bonds-with-warrants at par is 8.25%.
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