Old exams compilation.pdf

Uploaded by Anonymous User at 2019-05-07

Old exams merge

Can someone explain please? :)
Can someone explain please?
Hi, how do we solve this one??
Hello :) We are dealing with a coupon bond here which has a 7% cpn rate and a 8% YTM. For calculating the bond price right now, we need to identify the present value of the coupons and of the face value. The PV of the coupons we can best calculate with an annuity and the PV of the facevalue by jsut discounting it 30 years. Combined this gives us the following calculation: 70/0.08*(1-1/1.08^30)+1000/1.08^30 =887 --> D. Let me know if anything is still unclear.
How do we solve this one?
1000/1.1 + 3000/1.1^2 + 9000/1.1^3 + 5000/1.1^4 + 2000/1.1^5 = 14807 (answer A)
I do not get how can we solve this, can someone explain?
Hey there. In these kind of exercises always look out for specific keywords. Here they mention the word forever which leads us to a perpetuity formula. This combined with an IRR calculation where the NPV of a project is 0 gives us the following: NPV=-Investment+PV(Perpetuity) --> 0=-Investment+1500/0,05. If we solve this for the investment, we get to 30000. As we get 1500 per year, it takes 20 years until we have our investment back. Hope that clarifies it :)