TOPIC : BOND VALUATION ( CORPORATE FINANCE)

Q7) A bond is currently selling at 1.15 on its par value of $1,000. This bond has a maturity of 15 years and a coupon rate of 5%, payable semi-annually. If the inflation rate is 3%, what is the real yield on this bond?

TOPIC: PORTFOLIO RETURN AND RISKS ( CORPORATE FINANCE)

Q6) You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free asset. You must invest all of your money. Your goal is to construct a portfolio that has an expected return of 15% and that has only 120% of the risk of the overall market. If Stock R has an expected return of 25% and a beta of 1.6, Stock S has an expected return of 17.5% and a beta of 1.3, and the risk-free rate is 6%, how much money will you invest in Stock R? Explain your answer.