Choose the letter of the correct answer. Please provide solutions.

1. A firm has an issue price of P1,000 par value bonds with a 15% stated interest rate outstanding. The issue pays interest annually and has 13 years remaining to its maturity date. If bonds of similar risk are currently earning 11%, how much will each bond sell today?

a. 1,265.20 b. 1,369.99

c. 1,234.20 d. 1,270.00

2. Assuming the same facts above, how much will the bond sell two years from today?

a. 1,259.72 b. 1,248.28

c. 1,235.60 d. 1,221.51

3. Trinilla Corp expects rapid growth in its operations. To finance its investment needs, Trinilla issued 1,000 10%, P1,000 face value 5-year bonds dated October 1, 2019 paying interest semi-annually every April 1 and October 1. Bonds of similar risk currently yield 12% interest.

No. 20: Using the above data, what is the carrying amount of the bond to be reported in the Dec 31, 2019 Balagnce Sheet?

a. 1,000,000 b. 29,181.70

c. 941,028.56 d. 931,973.40

4. R. Isidro has a P1,000,000 portfolio containing the assets K, O, N, and H. P250,000 is invested in Asset K with a beta of 3.0, P150,000 in Asset O with a beta of .5, P350,000 in Asset N with a beta of 4.0 and the remainder in Asset H with a beta of 1. If the risk-free rate is 2.5% and the market premium is 8%, what is the portfolio rate of the return?

a. 1.45 b. 0.50 c. 2.23 d. 3.0

5. Combining Asset A and B with betas of 1.5 and 3 will most likely produce a portfolio with a beta of:

a. 1.0 b. 2.0 c. 3.5 d. all of the above