Finance Calculation Research Paper Example | Topics and Well Written Essays - 1750 words

Finance Calculation - Research Paper ExampleThis is the factor for the parentage and criticism of the Millionaires Factory by the Australian Shareholders Association.If the market required esteem of return is higher than the coupon rate of a link, the price of the beat goes down. Because in that respect are for sale bonds in the market, which give more care than it does. Therefore, investors do not feel interest to invest on the bond, which offers lower interest rate than markets other bond.If the market required rate of return is lower than the coupon rate of a bond, the price of the bond goes up. Because there are available bonds in the market, which give lower interest than it does. So, investors feel interest to invest on the bond, which offers higher interest rate than markets other bond.... outlay of bond at 4% market interest = 801-1/ (1+ .04) 5 .04 + 1000 / (1+.04) 5= $1177.62Price of bond at 6% market interest = 801-1/ (1+ .06) 5 .06 + 1000 / (1+.06) 5 = $1084.20Pr ice of bond at 8% market interest = 801-1/ (1+ .08) 5 .08 + 1000 / (1+.08) 5 = $999.99Price of bond at 10% market interest = 801-1/ (1+ .10) 5 .10 + 1000 / (1+.10) 5 = $684.66Price of bond at 12% market interest = 801-1/ (1+ .12) 5 .12 + 1000 / (1+.12) 5= $598.42Price of bond at 14% market interest = 801-1/ (1+ .14) 5 .14 + 1000 / (1+.14) 5= $553.20Price of bond at 16% market interest = 801-1/ (1+ .16) 5 .16 + 1000 / (1+.16) 5 = $479.47In while,1 = 16%2 = 14%3 = 12%4 = 10 %5 = 08%6 = 06%7 = 04%8 = 02%.Relationship between bond value and market required rates of returnIf the market required rate of return is higher than the coupon rate of a bond, the price of the bond goes down. Because there are available bonds in the market, which give more interest than it does. Therefore, investors do not feel interest to invest on the bond, which offers lower interest rate than markets other bond. If the market required rate of return is lower than the coupon rate of a bond, the price of th e bond goes up. Because there are available bonds in the market, which give lower interest than it does. So, investors feel interest to invest on the bond, which offers higher interest rate than markets other bond. Answer to the question no.6 art object 1We know,P = (D + p) / 1 + kIn while,P = Opening share valueD = Dividendp = Closing share valuek = .12g ( growth) = (3.5- 3.24) / 3.24 = 8.02% So, D = 3.5 + 3.5 8.02% = 3.78So now,