Which of the following statements about interest rate risk is correct? O Select one: o a. it is the magnitude of the price change for a given movement in coupon rates. o b. it is the magnitude of the yield change for a given movement in market interest rates. o o c. all of these statements are correct. o d. it is the magnitude of the price change for a given movement in market interest rates. Alice is considering investing in an annuity being offered by Tavoy Investments Ltd. The annuity will pay her $3,000 per month for 2 years. Alice is trying to work out how much this annuity is worth. She thinks she should receive a return equivalent to a nominal interest rate of 7.30% per annum, compounding daily. What is the value of this annuity to Alice? Select one: O a. $66,787.66 ob. $67,878.18 O c. $65,524.70 d. $68,254.03 To make provision for the possible impact of recessions in the future, Broome Mutual Bank would like to set up a reserve fund. The fund will earn an interest rate of 5% per annum. If the fund pays a fixed amount of $17 million to the bank annually for an infinite period, starting one year from today and the annual payment grows at 1.5% per annum, how much does the bank need in the fund today? Select one: a. $510.0 million b. $485.7 million o c. $462.6 million O d. $440.6 million A stock has been reported to have a total holding return of 13% over the last year. Last year the stock was purchased for $55 and recently sold for $59.65 after adjusting for the dividend that was to be paid soon. What is the value of this adjustment? Select one o a. $7.15 b. $4.65 c. $7.75 o d. $2.50 Boorowa Pastoral Ltd plans to raise $2.2 million to purchase land the graze more merino sheep. It will issue bonds with a term to maturity of 10 years. The face value per bond will be $1,000 and the coupon rate will be 7.5% per annum, paid semi-annually. Similar corporate bonds are trading at a yield to maturity of 9% per annum, compounded semi-annually. It is expected that these new bonds will trade at this rate. If the total cost of the bond issue is 3.5%, how many bonds will Boorowa Pastoral need to issue? Select one: o a. 2,437 o b. 2,527 O c. 2,438 d. 2,526