Chapter 6: Problems 2, 4, 5. Chapter 7: Problems 1, 2
CHAPTER 6 PROBLEMS
6-2.
A mutual funds net asset value is $23.40 and the fund sells its shares for $25.
What is the load fee as the percentage of the net asset value?
25-23.5/23.5 *100 =6.383 percent
6
Chapter 15: Problems 1, 3, 6, 10;
Chapter 16: problems 3, 4, 7
CHAPTER 15 PROBLEMS
15-1. If a six-month Treasury bill is purchased for $0.9675 on a dollar (i.e., $96,750 for
a $100,000 bill), what is the discount yield, the annual rate of interest, the
co
Chapter 8: Problems: 2, 3, 5, 6, 8.
CHAPTER 8 PROBLEMS
8-2.
A firm has the following items on its balance sheet:
Cash
Inventory
$ 20,000,000
134,000,000
Notes payable to bank
Common stock ($10 par; 1,000,000 shares outstanding)
31,500,000
10,000,000
Retai
Chapter 9: problems: 2, 4, 7
Chapter 10: problems 4, 11, 13, 17
CHAPTER 9 PROBLEMS
9-2.
An investor requires a return of 12 percent on risky securities. A stock sells for
$25, it pays a dividend of $1, and the dividends compound annually at 7 percent.
Wil
Chapter 14: Problems 1, 3, 5, 9, 15, 20, 25
CHAPTER 14 PROBLEMS
14-1. A $1,000 has a coupon rate of 8 percent and matures after ten years.
a) What is the price of the bond if the rate of interest is 8 percent?
1000=PV(1+.08)10
1000=PV(1.08)10
1000=PV(2.15
Why are bonds considered as less risky investments than as stocks? Discuss duration and portfolio
immunization.
In general, bonds are considered less risky investments compared to stocks for many reasons.
The first reason is that they carry a promise to t
1.
Who is most negatively affected by inflation?
o
o
o
o
Borrowers
People on fixed incomes
Businesses
The government
2.
Using the rule of 72, how long would it take for your money to double at an interest rate of 2.5%
o
28.8 years
o
2880 years
o
180 years
Question 1
What would be the yearly earnings for a person with $5900 in savings at an annual interest rate of 9.6% percent?
(Round your answer to the nearest whole number. Do not include the comma, period and $ sign in your response.)
ANSWER:
566
5900 x 0
NUMBER OF LOANS PRINCIPAL
RATE
MATURITY
50
100,000
4.000%
360
100
250,000
4.250%
180
50
300,000
5.000%
360
POOL BALANCE=
WAC=
45,000,000
4.472%
EDITABLE CELLS
WAM=
MONTHS
260
TOTAL AMOUNT WEIGHT RELATIVE TO TOTAL POOL BALANCE
5,000,000
0.1111111111
25,000
CMOs Continued: PO and IO strips/Floaters and Inverse Floaters
RES 3400
From a single pool of loans (or a portion of a pool) we can create principal only and interest only
securities
Principal Only (PO) Tranche: investors have claim to principal paid by u
CMBS
RES 3400
11/7/2016
CMBS vs. RMBS
Weve spent most of our time this semester talking
about residential MBS (RMBS)
Much of what weve discussed generalizes to CMBS
analysis and pricing
Therefore, we are going to focus our discussion on a
few unique at
Real Estate Portfolios
and Performance
RES 3400
December 7, 2016
Evaluating a project vs. a portfolio
So far, we have considered RE investments largely in isolation.
Now we will briefly discuss ways to measure risk and return in different RE
investments
Commercial Real
Estate Funding
RES 3400
11/14/2016
Debt Financing in Real Estate
Prior to the 1990s, underwriting criteria were fairly standardized
LTVs 65%-75%
Debt coverage ratios 1.25x-1.5x
Commercial banks, life insurance companies, and savings in
EXERCISES
Exercise 81
1.
To record the purchase of inventory on account and the payment of freight
charges.
Inventory.
Accounts payable.
Inventory.
Cash.
2.
5,000
300
300
To record purchase returns.
Accounts payable.
Inventory.
3.
5,000
600
600
To record
Investing in REITs
December 5, 2016
RES 3400
REIT FFO
Funds from Operations (FFO)
REIT equivalent to earnings per share
Used by analysts to determine how much CF is available for
distribution to REIT investors
Allows an apples to apples comparison of
Floater and Inverse Floater
Input Assumptions
Total amount of tranche
$20,000,000
Interest rate for tranche
6.00%
Total interest available
$1,200,000
$ Amount Scale
Floater (F)
$10,000,000
Inverse floater (I 10,000,000
Total
20,000,000
F / IF Ratio
Max In
HW 8
Chapter 6
2. Load fee: $25 - $23.40 = $1.60
Load fee as a percent of net asset value:
$1.60/$23.40 = 6.8%
4. The investor received $0.58 and experienced appreciation of $3.41 ($23.41 - $20)
for a total gain of $3.99. On an investment of $20, the retu
HW 6
Chapter 15
1. The T-bill is purchased for $96,750 and will pay $100,000 when retired.
The discount yield is
($3,250/$100,000)360/180 = 6.5%.
The annual yield is
($3,250/$96,750)(365/180) = 6.81%.
The compounded yield is
.5
$96,750( 1 + i) = $100,000
HW 7
CHAPTER 17
2. a. Intrinsic value of the call: $26 - 25 = $1
Time premium: $4 - 1 = $3
b.
Price of the stock
$20
25
30
40
Value of the call at expiration
$0
0
5
15
c. If the price of the stock rises from $26 to $40 (a 54 percent increase), the price o
HW 3
Chapter 9
2. V = $1(1 + .07) = $21.40
.12 - .07
If the price is $25, the stock is overvalued, and the investor should not buy it.
According to the dividend-growth model, the investor should pay no more than
$21.40 in order to earn the required rate o
Running head: 2.4 HW 2
1
2.4 HW 2
Personal Finance
2.4 HW 2
2
2.4 HW 2
1. Calculating Balance Sheet Amounts. Based on the following data, compute the total
assets, total liabilities, and net worth.
Liquid assets $4,670
Investment assets 26,910
Household a
Running head: 1.4 HW 1
1
1.4 HW 1
MGMT 333
1.4 HW 1
2
1.4 HW 1
1. Calculating the future value of property. Ben Collins plans to buy a house for
$220,000. If that real estate is expected to increase in value by 3 percent each year,
what will its approxima