Question
Consider the following information for each of the parts below. Show all calculations. John has $40,000 to invest. He is working as a Mixologist for
Consider the following information for each of the parts below. Show all calculations.
John has $40,000 to invest. He is working as a Mixologist for Fun Cruise Lines, inc. (FCL) and wants to invest in the company he works for. For parts I-IV below, calculate the HPR in dollars and the HPR in % (annualized) for Johns investments.
IV. John decided to reinvest the funds from part III on April 1, 20x8. He buys 11 bonds issued by FCL for $1,000 each with a coupon rate of 7% (paid 1.75% quarterly).
John sells these bonds on December 31, 20x9 (exactly 9 months after purchase). The Yield to Maturity has dropped further to 5%. When John sells these bonds, they have exactly 20 years to maturity remaining.
HPR $ = ____________
HPR = ___________% (be sure to annualize your calculation)
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