Answer:
6.7%
12.7%
7.5%
Explanation:
Required rate of return = risk free rate + ( stock beta × Markert premium)
When beta = 0.8
The required rate of return = 3.5% + (4% × 0.8) = 6.7%
When beta = 2.3
The required rate of return = 3.5% + (4% × 2.3) = 12.7%
The required rate of return on the market:
3.5% + (4%×1) = 7.5%
I hope my answer helps you.
True,Because all contracts are signed under the terms and conditions apply such policies like utmost good faith were all information should be provided and should be true
Answer:
Hersey's bond = $1125.513
Mars bond = $1172.259
Explanation:
Hersey bond;
Period(t) = 10years = 40(quartely)
Coupon (C) = $30
Rate (r) = 0.1 = 0.025(quarterly)
Pay at maturity(p) = $1000
Using the both present value (PV) and compound interest formula ;
PV =[ C × (1 - (1+r)^-t) ÷ r] + [p ÷ (1 + r)^t]
PV = [30×(1-(1.025)^-40)÷0.025] + [1000÷(1.025)^40]
PV =( 753.083251562) + (372.4306236)
PV = $1125.513
Mars bond;
Period(t) = 20years = 80(quartely)
Coupon (C) = $30
Rate (r) = 0.1 = 0.025(quarterly)
Pay at maturity(p) = $1000
PV =[ C × (1 - (1+r)^-t) ÷ r] + [p ÷ (1 + r)^t]
PV = [30×(1-(1.025)^-80)÷0.025] + [1000÷(1.025)^80]
PV =(1033.55451663) + (138.704569467)
PV = $1172.259
They are fast easy and cheaper, but offer less control and customisability.
