coupon Joseph owns investment A and 1 bond B. The total value of his holdings is $2,770.00. Bond B has 7.39 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Joseph of X per year forever with the first annual cash flow expected in 1 year from today. The expected return for investment A is 7.60 percent. What is X, the fixed annual cash flow that will be paid forever by investment A? O $128.03 (plus or minus $1) O $154.34 (plus or minus $1) O $129.99 (plus or minus $1) O $156.27 (plus or minus $1) O none of the answers are within $1 of the correct answer

coupon Joseph owns investment A and 1 bond B. The total value of his holdings is $2,770.00. Bond B has 7.39 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Joseph of X per year forever with the first annual cash flow expected in 1 year from today. The expected return for investment A is 7.60 percent. What is X, the fixed annual cash flow that will be paid forever by investment A? O $128.03 (plus or minus $1) O $154.34 (plus or minus $1) O $129.99 (plus or minus $1) O $156.27 (plus or minus $1) O none of the answers are within $1 of the correct answer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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Robert owns investment A and 1 bond B. The total value of his holdings is $3,040.00. Bond B has a coupon rate of 9.33 percent, par value of $1,000.00, YTM of 7.83 percent, 10 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Reg of $374.40 per year forever with the first annual cash flow expected in 1 year from today. What is the expected return for investment A? O 23.42% (plus or minus 2 bps) O 19.33% (plus or minus 2 bps) O 18.54% (plus or minus 2 bps) O 12.32% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer
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