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Suppose that an investment project provides 5% HPR each quarter. Which of the following is correct regarding the APR (annual percentage return) and the EAR
Suppose that an investment project provides 5% HPR each quarter. Which of the following is correct regarding the APR (annual percentage return) and the EAR (effective annual rate)? A. APR is greater than EAR. B. APR is equal to EAR. C. EAR is greater than APR. D. None of the above. Consider a 30-year bond with par value of $1000, suppose it coupon rate is 6% for the first 20 years and increases to 10% for the remaining 10 years. What is the price of the bond if the discount rate is 8%? A. $774.84 B. $832.43 C. $1021.02 D. $1359.47 E. None of the above. Consider a 20-year bond with par value of $1000 and coupon rate of 8%. The discount rate is 10% for the first 10 years and it drops to 6% for the remaining 10 years. What is the price of the bond? A. $867.21 B. $933.86 C. $1098.46 D. $1229.02 E. None of the above
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