BU111 Spring 2012 - Supplementary Questions

Your broker offers a minimum margin requirement of 80

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Unformatted text preview: in at a price of $20. Your broker offers a minimum margin requirement of 80%. You decide to later sell your shares when the market price increases to $23. a) What is your capital gain or loss? b) If the price decreased to $15 before you sold your shares, what would be the amount of the margin call? Raising Marks. Raising Money. Raising Roofs. www.schoolsos.com Students Offering Support: Wilfrid Laurier University Bonds Important Terminology: Face Value = the fixed amount the holder of the bond will receive at expiry = $1000 Coupon Rate = fixed rate of interest the bond hold receives in semi-annual payments Discount = the price of the bond is less than its face value Premium = the price of the bond is greater than its face value Par = the price of the bond is equal to its face value Approximate Yield to Maturity = the return that the bond provides, expressed as a % of its current purchase price Steps to Success – Pricing a Bond with TVM: 1. 2. 3. 4. Calculate the semi-annual coupon payments Calculate the interest rate per payment period Calculate the present value of the coupon payments (ordinary annuity) Calculate the present value of the face value received upon maturity...
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This note was uploaded on 02/07/2014 for the course BU 111 taught by Professor Jessicastockie during the Fall '08 term at Wilfred Laurier University .

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