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FIN2601-25-S1

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The Ivy Vine has bonds on the market with 15 years to maturity, a yield-to-maturity of 9,2%, and a current price of R995,09. The bonds make monthly payments. What is the coupon rate?

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Flawless Inbound is selling ten-year bonds with a par value of R1 000 at a yield to maturity of 7%. How much will you have to pay for the bond? 

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Lawless Entertainment has a 9%, semi-annual coupon bond outstanding with a current market price of R1 080,46. The bond has a par value of R1 000 and a yield to maturity of 5,72%. How many years is it until this bond matures?

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Suppose you purchase a zero-coupon bond with a par value of R1 000 and a

maturity of 25 years, for R180. If the yield to maturity on the bond remains

unchanged, what will the price of the bond be five years from now?

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The real rate of interest is 5,20% and inflation is expected to be 3,60% for the next three years. A three-year treasury security yields 14,89%. What is the maturity risk premium for the three-year security? 

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Greenbrier Industrial Products' bonds have a 7,60% coupon and pay interest annually. The par value is R1 000 and the current market price is R1 062,50 per bond. The bonds mature in 16 years. What is the yield to maturity?

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The Amelia Knight investment fund has a total capital of R120 000

invested in three shares:

Shares

Return

Invested

Technological Sector

25%

R60 000

Education Sector

13%

R30 000

Mining Sector

20%

R30 000

 

The current risk-free rate is 5,5%. Market returns have the following

estimated probability distribution for the next period:

Probability

Market return

0,3

–10%

0,1

   14%

0,2

   15%

0,4

   18%

 

What is the beta coefficient of the investment fund?

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Your portfolio is made up of R50 000 invested in a share with a

beta of 1,8, R100 000 invested in a share with a beta of 0,8, and R150 000

invested in a share with a beta of 1,2. The risk-free interest rate is 7%. This

portfolio last year had a required rate of return of 13%. This year, nothing

has changed except for the fact that the market risk premium has increased by 2

percent (two percentage points). What is the portfolio's current required rate

of return?

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Real Estate Inc purchased shares in Echelon Estate as an investment. Seeing that financial analysts had predicted that Echelon Estate would do very well, Real Estate Inc expected a good return on its investment. The investment originally cost R2 500 000 and Real Estate Inc received R150 000 at the end of the first year. Based on market values, the investment is now worth R2 800 000. What is the return on the investment?

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Vantage is a Transportation Software Company with four main

subsidiaries. The percentage of its business coming from each of the

subsidiaries, as well as their respective betas, are as follows:

Subsidiary

Percentage of Business

Beta

Electric utility

60%

0,70

Cable company

25%

0,90

Real estate

10%

1,30

International special projects

5%

1,50

 

Assume that the risk-free rate is 6% and that the market risk premium is

5%. What is the company’s required rate of return?

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