Entries by Hannah Wangui

coupon bond

4.   Construct and price a 6-year zero coupon bond and a 6-year annuity of $1 given that a 4% annual coupon bond with a term to maturity of 6 years sells for 89.15% of its face value while a 6-year 8% annual coupon bond sells at 108.95% of its face value.   Looking for a Similar […]

 

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You earned $90,000 in the year that ended today at t=0. So far, you have saved nothing

You earned $90,000 in the year that ended today at t=0. So far, you have saved nothing. Starting with t=1, you plan to save 15% of your annual earnings. Your earnings are expected to increase at 7.5% per year for the next 30 years. You plan to retire at t=30. Assuming that the return that […]

 

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Work out the standard deviation of returns on an equally weighted portfolio of 6 identical stocks, each of which is expected to yield a return of 9% with a variance of 0.16

Work out the standard deviation of returns on an equally weighted portfolio of 6 identical stocks, each of which is expected to yield a return of 9% with a variance of 0.16. You are also given that the correlation between the returns on any pair of the stocks in the market is 0.36. Work out […]

 

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