Question 36 2 points Save It is commonly accepted that a perpetuity must continu

Question

  Question 36 2 points   Save   It is commonly accepted that a perpetuity must continue for at least 50 years. True False It is commonly accepted that a perpetuity must continue for at least 50 years. The total amount of interest that a 10-year investment earns will exactly double when the stated annual interest rate is doubled. An indenture is an agreement between the bond issuer and a trustee who represents the interests of the bond investors. Podunk Communications bonds mature in 6 1/2 years with a par value of $1,000. They pay a coupon rate of 9% with semi-annual payments. If the required rate of return on these bonds is 11% what is the bond's value? The appropriate measure for risk according to the capital asset pricing model is: What is the present value of $12,500 to be received 10 years from today? Assume a discount rate of 8% compounded annually and round to the nearest $10. The formula for present value is:

Explanation / Answer

36) False as Perpetuity means No end

37)True

38) false as Indenture means A legal and binding contract between a bond issuer and the bondholders. and does not necessarily have a trustee

39)$1,022.74

40)the coefficient of variation of a firm's cash flows

41)$5,790

Present value= FVn/(1+i)n

=12500/(1+0.08)^10

=5789

=$5790

42)PV = FVn/(1+i)n

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