Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: You are offered two alternatives: a share of preferred stock which pays you 40 dollar per year [but the actual payments are made quarterly] for ten years; or some fifteen year US savings bond that pays 6 percent coupon per year [on a quarterly basis] and with a face value of 100 dollar. The preferred stock and the bond have beta risks of 0.5 and 0.2, respectively. The risk-free interest rate [on a quarterly basis] is four percent and the expected market return [also on a quarterly basis] is 12 percent. How many bonds have to offer to you for each share of preferred stock in order to make you indifferent between the two alternatives?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M917093

Have any Question? 


Related Questions in Basic Finance

Suppose you want to use the variable latitude to estimate

Suppose you want to use the variable Latitude to estimate values for the variable Average Jan temperature. In this instance, identify in words which variable is the explanatory variable and which variable is the response ...

Family finance homework regarding automatic millionair

Family finance homework regarding Automatic millionair book Read the book The Automatic Millionaire by David Bach. Turn in a 2-5 page double-spaced paper (3 points). Please do not go over 5 pages. Write one paragraph for ...

There are a number of web sites that will calculate the

There are a number of web sites that will calculate the value of an option, some of the use Black Scholes. Some of the sites you may try include: www.option-price.com www.optionsprofitcalculator.com www.calloptionputopti ...

At the end of 2011 home depots total capitalization

At the end of 2011 Home Depot's total capitalization amounted to $28,992 million. In 2012 debt investors received interest income of $635 million. Net income to shareholders was $4,526 million. (Assume a tax rate of 35%. ...

Draw a short- run aggregate supply curvewhy is the curve

Draw a short- run aggregate supply curve. Why is the curve upward sloping? What causes the short- run aggregate supply curve to shift?

What are cash inflows and outflows what are the

What are cash inflows and outflows? What are the formulas?

Suppose the policy interest rate controlled by the central

Suppose the policy interest rate controlled by the central bank and the inflation rate were both zero. Explain in terms of the aggregate demand-aggregate supply framework how the economy could fall into a deflationary sp ...

In order to obtain a sample of voters in pennsylvania a

In order to obtain a sample of voters in Pennsylvania, a simple random sample of 10 counties is selected. From each of the selected counties, 10 precincts are chosen at random. Finally, from each of these 100 precincts , ...

Impact of money supply growth explain why an increase in

Impact of Money Supply Growth Explain why an increase in the money supply can affect interest rates in different ways. Include the potential impact of the money supply on the supply of and the demand for loanable funds w ...

The mean sat score in mathematics is the standard

The mean SAT score in mathematics, , is . The standard deviation of these scores is. A special preparation course claims that its graduates will score higher, on average, than the mean score. A random sample of students ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate