1. An investor purchased a 30-year Treasury bond with a 6% semi-annual coupon ten years ago, when the bond was traded at par value. In 10 years? time, the bond?s yield to maturity has risen to 7% (APR).

a) If the investor sells the bond now, what internal rate of return (expressed in APR) will the investor earn on his investment in the bond? [Hints: use excel built-in function RATES() ]

b) If instead this investor holds the bond to maturity, what internal rate of return will the investor earn on his investment in the bond?

2. Jack is aiming to estimate the stock price of Haliford Corp. The firm had earnings $3 per share in the fiscal year of 2016. Firm management has been paying 20% of earnings to investors in the past 10 years and will continue to do so in the future. The historical return on equity of Haliford is 4%. Jack will use growing dividend model to estimate Haliford stock price. What is his estimate if the required return by investor is 5%?

3. ICD Vision is an animation software company based in the Mountain View. It has had returns of 15.38%, 8.43%, 11.97%, 25.83%, and -9.17% over the past five years, respectively. What was the holding period return for the stock?

4. SeekAlpha is managing an all-equity portfolio worth $ 1.5 billion dollars for its investors. The portfolio has a correlation coefficient with the market portfolio of 0.28 and a variance of 0.3285.

Other information is given below:

-Risk-free rate is 4.7%

-Market portfolio variance is 0.0382

-Market portfolio expected return is 4.7%

What is the expected return of SeekAlpha?s portfolio?

1. An investor purchased a 30-year Treasury bond with a 6% semi-annual coupon ten years ago, when the bond was traded at par value. In 10 years' time, the bond's yield to maturity has risen to 7% (APR). a. If the investor sells the bond now, what internal rate of return (expressed in APR) will the investor earn on his investment in the bond? [Hints: use excel built-in function RATES() ] b. If instead this investor holds the bond to maturity, what internal rate of return will the investor earn on his investment in the bond? 2. Jack is aiming to estimate the stock price of Haliford Corp. The firm had earnings $3 per share in the fiscal year of 2016. Firm management has been paying 20% of earnings to investors in the past 10 years and will continue to do so in the future. The historical return on equity of Haliford is 4%. Jack will use growing dividend model to estimate Haliford stock price. What is his estimate if the required return by investor is 5%? 3. ICD Vision is an animation software company based in the Mountain View. It has had returns of 15.38%, 8.43%, 11.97%, 25.83%, and -9.17% over the past five years, respectively. What was the holding period return for the stock? 4. SeekAlpha is managing an all-equity portfolio worth $ 1.5 billion dollars for its investors. The portfolio has a correlation coefficient with the market portfolio of 0.28 and a variance of 0.3285. Other information is given below - Risk-free rate is 4.7% - Market portfolio variance is 0.0382 - Market portfolio expected return is 4.7% What is the expected return of SeekAlpha's portfolio