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If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest?

Suppose a firm has $100 million in excess cash. It could

Suppose a firm has $100 million in excess cash. It could

Which of the following bonds has the greatest volatility?

Music Company is considering investing in a new project. The project will need an initial investment of $2,400,000 and will generate $1,200,000 (after-tax) cash flows for three years. Calculate the NPV for the project if the cost of capital is 15 percent.

A government bond issued in Germany has a coupon rate of 5 percent, a face value of 100 euros, and matures in five years. The bond pays annual interest payments. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 106 euros.

A three-year bond with 10 percent coupon rate and $1,000 face value yields 8 percent. Assuming annual coupon payments, calculate the price of the bond.

Which of the following statements about the relationship between interest rates and bond prices is true?

If a bond’s volatility is 10.00 percent and the interest rate goes down by 0.75 percent (points), then the price of the bond 

Consider the impact of inflation risk on the term structure of interest rates. If investors become more wary of inflation, one would expect to observe a steeper, more upwards sloping, term structure of interest rates.