Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Basic Finance Expert

You are required to set up a separate worksheet (spreadsheet model) for each of the following two problems:  

problem 1: find out the yield to maturity of a 7-year $1,000 par value bond with an annual coupon rate of 7.5% and a current price of $1,125. Provide the spreadsheet solutions for both annual and semi-annual payments of interest. Comment on the relationship between the yield to maturity and the timing of interest payments, providing an appropriate table or graph.

problem 2: Obtain from Bloomberg (or Datastream, or Thomson ONE Banker, or Yahoo!Finance) the beginning of month values for the period 2009-2012 of the Standard & Poor’s (S&P) SMALL CAP 600 Index and New York Stock Exchange (NYSE) World Leaders Index. Assume that you are a risk-averse investor.

For each of the two assets represented by the indices, find out annual returns and build a frequency distribution of annual returns. Provide graphs of the distributions.
 
Explore the risk-return relationship for the two assets. Plot your results on a graph with the standard deviation of annual returns of each asset on the horizontal axis and the average annual return on the vertical axis, and comment on which asset performed better. 
 
Assume that you form a portfolio by investing equal amount of money in each asset. Determine the average and standard deviation of the portfolio’s annual returns. Provide your interpretation of the risk and return of the equally-weighted portfolio compared to those of the individual assets. 
 
find out and graph the average annual returns and standard deviations of all portfolios that are combinations of the S&P SMALL CAP 600 Index and NYSE World Leaders Index with the proportion of the S&P SMALL CAP 600 Index being 0, 10, 20, 30, 40, 50, 60, 70, 80, 90, 100%. Comment on the profile of the risk-return trade-off between the portfolios.

Indicative Reading:

A) For advice on design approaches that can assist with production of useful to financial managers Excel applications you might wish to consult Day’s Mastering Financial Modelling in Microsoft Excel and the latest edition of Benninga’s Principles of Corporate Finance with Microsoft Excel. 

B) For working knowledge of the concepts and theories of corporate finance involved with this assignment you will need to read the relevant chapters of the latest edition of Corporate Finance by Berk and DeMarzo, the core text supporting BAM021 Corporate Finance. 
 
C) Basic statistics concepts and Excel tools for basic statistical analyses are covered in Chapter 16 of Day’s Mastering Financial Mathematics in Microsoft Excel and in Chapter 9 of Benninga’s Principles of Corporate Finance with Microsoft Excel. 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9368

Have any Question? 


Related Questions in Basic Finance

A using an hp 12c calculator what are the correct steps to

a) Using an hp 12c calculator, what are the correct steps to calculate IRR entered as monthly payments and if summed up for a year? b) Using an hp 12c calculator, what is the best way to calculate effective interest rate ...

The company metallica heavy metal mining needs to diversify

The Company Metallica Heavy Metal Mining needs to diversify its operations. Some recent monetary information shown here: Stock price--------------------$ 74  Number of shares-------------30,000  Total assets ------------ ...

Suppose the schoof company has this book value balance

Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal ...

Question - gamma energy is an oil producing company that

Question - Gamma Energy is an oil producing company that owns an oil field from which it can deliver 10 mln barrels of oil per year for the next four years. The current oil price is USD 75 per barrel. Extraction costs ar ...

Grant technologies needs 300000 to pay its supplier grants

Grant Technologies needs $300,000 to pay its supplier. Grant's bank is offering a 210-day simple interest loan with a quoted interest rate of 11 percent and a 20 percent compensating balance requirement. Assuming there a ...

Marlene decides to take the investors offer she buys the

Marlene decides to take the investor's offer. She buys the business and begins paying the $5,000 monthly payments to the investor. Shortly thereafter, she realizes what a bargain she found. She's learned that, because of ...

Discuss the legal ethical and economic-social implications

Discuss the legal, ethical, and economic-social implications of the below case study. Someone you know has knowledge of an outstanding merger between two companies. The combination of the two firms will certainly change ...

A firm is considering a project that has the following

A firm is considering a project that has the following estimated cashflows: Increased sales to business of $100,000 for the next six years (starting in one year's time) Increased costs of $30,000 for the next six years ( ...

Question - dr bueller had recently overheard a few of his

Question - Dr. Bueller had recently overheard a few of his colleagues discussing possible investments in the international marketplace. Wanting to explore all of his potential investment options, he has asked you to expl ...

Old xyz corp has total assets of 1000000 and a debt ratio

Old XYZ Corp has total assets of $1,000,000 and a debt ratio of 30%. Currently it has sales of $2,500,000, total fixed costs of $1,000,000, and EBIT of $50,000. If XYZ pays 6% interest on debt, what is XYZ's ROE?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As