Answer:
β of the stock = 1
Explanation:
Given:
α of a stock = 0%
Return on the market index = 16%
Risk-free rate of return = 5%
Required rate = 11% + 5% = 16%
β of the stock = ?
Computation of β of the stock:
Required rate = Risk-free rate of return + [β (Return on the market index - Risk-free rate of return)]
16% = 5% + [β (16% - 5%)]
16% - 5% = β (16% - 5%)
11% = [β (16% - 5%)
11% = [β (11%)
β of the stock = 1
Answer:
option (C) - 6.11%
Explanation:
Data provided :
Coupon rate one year ago = 6.5% = 0.065
Semiannual coupon rate = 
= 0.0325
Face value = $1,000
Present market yield = 7.2% = 0.072
Semiannual Present market yield, r = 
= 0.036
Now,
With semiannual coupon rate bond price one year ago, C
= 0.0325 × $1,000
= $32.5
Total period in 15 years = 15 year - 1 year = 14 year
or
n = 14 × 2 = 28 semiannual periods
Therefore,
The present value = ![C\times[\frac{(1-(1+r)^{-n})}{r}]+FV(1+r)^{-n}](https://tex.z-dn.net/?f=C%5Ctimes%5B%5Cfrac%7B%281-%281%2Br%29%5E%7B-n%7D%29%7D%7Br%7D%5D%2BFV%281%2Br%29%5E%7B-n%7D)
= ![\$32.5\times[\frac{(1-(1+0.036)^{-28})}{0.036}]+\$1,000\times(1+0.036)^{-28}](https://tex.z-dn.net/?f=%5C%2432.5%5Ctimes%5B%5Cfrac%7B%281-%281%2B0.036%29%5E%7B-28%7D%29%7D%7B0.036%7D%5D%2B%5C%241%2C000%5Ctimes%281%2B0.036%29%5E%7B-28%7D)
or
= $32.5 × 17.4591 + $1,000 × 0.37147
= $567.42 + $371.47
= $938.89
Hence,
The percent change in bond price = 
= 
= - 6.11%
therefore,
the correct answer is option (C) - 6.11%
Answer:Patricia is bound to perform
Explanation:Bound are words applied to the contract entered into, between a master and an apprentice the latter.
to impose legal obligations or duties upon a person or party to an agreement.
Answer:
1. How is a bond like an IOU?
A bond is an IOU because it is actually a type of IOU. A bond is in essence a security in which the bond issuer promises to pay the bondholder the full value of the bond at maturity, plus interest payments (coupons) that can be paid either periodically, or at maturity as well.
2. Why is an investment grade bond is considered a “safe” investment?
Investment grade bonds are those bonds that have a rating that is considered "safe". This rating is provided by agencies such as Standard and Poors or Moody's. It is the credibility behind these agencies that makes a bond with that type of rating a safe investment.
3. How can an investor make money by buying a bond?
The investor makes money because he or she obtains the full value of the bond at maturity plus interest (coupon payments).
Bondholders also have priority over stockholders in case of bankruptcy, so a bond is in many cases a safer investment than a stock.
4. Would you recommend your Stock Market Game team include a bond in your portfolio? Why, why not?
Yes, bonds should be included because they are one of the two main types of securities, the other being stocks precisely. Companies often have to take the decision to finance their operations either with bonds or stocks, or a combination of the two, so if the game includes bonds, it also becomes more realistic.
Answer: Asset allocation
Explanation:
Research from the 1970s to the 1990s found that over 90 percent of a fund's returns over time is explained by asset allocation.
It should be noted that asset allocation is simply referred to as an investment portfolio technique which balance risk through the division of assets among major categories like stocks, bonds, cash, real estate, and derivatives.
