Question
4-2-years ago you purchased a bond with 8 years to maturity, 10% coupon rate with semi-annual payments and $1000 face value. At the time of
4-2-years ago you purchased a bond with 8 years to maturity, 10% coupon rate with semi-annual payments and $1000 face value. At the time of the purchase, it had a yield to maturity of 12%. If you sold this bond today for $924, what is your realized return?
5-Suppose you have the following information, Rf= 2.5%, beta of an asset is 1.35 and the risk premium is 9%. An analyst has estimated that the return of this asset should be 12%. What you can say about this asset relative to CAPM? What would be the investment decision?
6-You hold a diversified portfolio consisting of a $25,000 investment in each of 4 different common stocks. The portfolio beta is equal to 1.32. You have decided to sell company A stock (b = 1.28) at $25,000 net and use the proceeds to buy a like amount of company B stock (b = 0.70). What is the new beta of the portfolio?
Please show all work and I will upvote. Thanks!
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