In return for an initial investment of Rs. 10,000 an investor will receive Rs. 12500 in 5 years' time. In addition there is a 50% chance that the investor will receive a further payment of Rs. 5000 in 10 years' time. Calculate the expected yield on this investment.
An investor is considering the purchase of 1000 shares in a company, Dividends on the share will be paid annually. The next dividend is due in one year and is expected to be 90Ps. per share. The second dividend is expected to be 9% greater than the first and the third dividend is expected to be 8% greater than the second. Thereafter the dividend is expected to grow at 5% p.a. compound in perpetuity. Calculate the present value of this dividend stream at a rate of interest of 7% p.a effective.
Under a hire purchase scheme, a person buys a refrigerator by availing a loan on 1st July 2000 and agrees to repay by six equal monthly installments starting from 31st January 2001. If the interest on the loans is calculated using a flat rate of 7 1/2% p.a, determine the APR (Annual percentage rate of charge) for the transaction.
A 3-year index linked security is issued at time 0. The security pays nominal coupons of 5%annually in arrears and is redeemable at par. The coupons and capital repayment are inflated by reference to the inflation index value 8 months before the payment is made. The inflation index value 8 months before the payment was 105.
For the last 10 years a man has paid Rs. 5000 at the start of each month into a recurring deposit account with a bank that has achieved a real rate of interest of 3% per annum over the period. If the inflation rate has been at a constant rate of 5% per annum calculate the balance in his account today.
The only cash flow during the calendar years 1997, 1998 and 1999 that was not generated from the assets of the fund was a payment of Rs. 140,00,000 received by the fund on 30 june, 1999. For the period from 1 January 1997 to 31 December 1999 calculate:
iii) A fixed interest security pays coupons of 8% p.a half-yearly in arrears and is redeemable at 110%. Two months before the next coupon is due, an investor negotiates forward contract in which he agrees to buy Rs. 5 lakhs nominal of the security in ten months' time. The current price of the stock is Rs. 8.40 per Rs. 100 nominal and the risk free force of interest is 5% p.a
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