Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help with my finance homework please. thank you :) YOU CAN SUBMIT AN EXCEL FILE FOR THIS ASSIGNMENT Part I (40 points) Suppose you are
help with my finance homework please. thank you :)
YOU CAN SUBMIT AN EXCEL FILE FOR THIS ASSIGNMENT Part I (40 points) Suppose you are thinking of investing on Greek government bonds. Each Greek bond will pay $80.00 at the end of every year for 4 years. At the end of 4th year, each bond will also pay back the principal of $1000. Today is the 1st day of year 1. a) What is the coupon rate of this bond? b) What is the price of such a bond if the promised yield is 15%? c) Greece has some probability of going bankrupt within 1 year. Suppose that the probability of Greek default is 30% and if Greece defaults, assume that it will only pay 50% (this is called a \"hair cut\") of the agreed amount of coupon and principal payments in that and the subsequent years. Alternatively, you can invest on a 4year US bond with 4% coupon and $1,000 face value that sell for $964.54 today. At most how much would you pay for a Greek bond given the information provided in parts (a), (b), and (c)? Part II (60 points) Calculate the monthly return of the stocks of Amazon and Walmart, each, from Jan 4, 2010 to March 2, 2016. (Yahoo Finance provides monthly returns! Go to Historic Prices on left side of Yahoo Finance page for the company, say Walmart, and use the prices given under \"adjusted close\") 1. What is the monthly expected return and the standard deviation of a portfolio that is composed of a) 10% Amazon, 90% Walmart? b) 20% Amazon, 80% Walmart? c) 30% Amazon, 70% Walmart? d) 40% Amazon, 60% Walmart? e) 50% Amazon, 50% Walmart? f) 60% Amazon, 40% Walmart? g) 70% Amazon, 30% Walmart? h) 80% Amazon, 20% Walmart? i) 90% Amazon, 10% Walmart? 2. What is the composition of a portfolio that is comprised of Amazon and Walmart stocks and that has the lowest standard deviation? 3. You have $10K. What is the expected value and the standard deviation of a portfolio that is formed by investing $5K at the risk free rate and $5K on the portfolio you found in question 2 (assume that monthly risk free rate is 0.0025)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started