American University of Armenia Finance Problems Questions Find the attached document for the instructions. Ensure zero plagiarism and use good grammar Late

American University of Armenia Finance Problems Questions Find the attached document for the instructions. Ensure zero plagiarism and use good grammar Late submission will not be accepted Question 1
(a) What is the future value of $1200 invested for 3 years at an interest rate of 6% p.a., compounded
quarterly?
(b) What is the Effective Annual Rate in part (a)?
(c) What is the present value of an annuity consisting of payments of $265 every six months for 12
years, if the discount rate is 9% p.a., compounded semi‐ annually?
(d) You deposit $100 into a bank account for 9 years, at the end of which time the money has
grown to $183.85. What is the annual interest rate on the account?
(e) If the nominal rate of interest is 11% and the expected inflation rate is 8%, what is the
approximate real interest rate?
Question2
You have a choice between the following three investments:
A bank bill. The bill was issued as a 90‐ day bank bill 35 days ago. It has a face value of $1000
and is currently trading at a yield of 5.75% p.a.
A coupon bond issued by a AA‐ rated company. Fitch Ratings has estimated that the yield on debt
issued by AA companies in the current interest rate environment to be 6.6%. The bond has a face
value of $100,5 years to maturity and makes semi ‐ annual coupon payments at a coupon rate of
5.4% p.a.
An ordinary share. The share is expected to pay an annual dividend of $14 next year, $12 in year 2,
$10 in year 3, and then $9 every year thereafter in perpetuity. Your required rate of return on this
share is 10%.
(a) What is the value of the bank bill?
(b) What is the value of the bond?
(c) What is the value of the share?
*You can write answers on the paper and take photo of it or type them if possible
Essay questions
(write an answer)
1. The expected return on a portfolio is the weighted average of the expected return on each share
in the portfolio. Why is the risk of a portfolio less than the weighted average for the risk of each
share in the portfolio?
2. What are the advantages of company, compared to a sole trader or a partnership, as a form of
business organisation?
3. What are the advantages and disadvantages of the IRR method of project evaluation, compared
to NPV and the Payback Period methods?

Purchase answer to see full
attachment