1. Compute the domestic country beta of Telmex as well as its world beta. What do these betas measure?
2. Suppose the Mexican stock market is segmented from the rest of the world. Using the CAPM paradigm, estimate the equity cost of capital of Telme..

1. Define each of the following terms:
a. Bond; Treasury bond; corporate bond; municipal bond; foreign bond
b. Par value; maturity date; coupon payment; coupon interest rate
c. Floating-rate bond; zero coupon bond; original issue discount bond
d. Cal..

A "three against nine" FRA has an agreement rate of 4.75 percent. You believe six-month LIBOR in three months will be 5.125 percent. You decide to take a speculative position in a FRA with a $1,000,000 notional value. There are
183 days in the FRA p..

A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume that the bond has just been issued.)
a. What is the bond’s yield to maturity?
b. What is the bond’..

A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume that the bond has just been issued.)
a. What is the bond’s yield to maturity?
b. What is the bond’..

A 15-year annuity pays $1,500 per month, and payments are made at the end of each month. If the interest rate is 11 percent compounded monthly for the first seven years, and 7 percent compounded monthly thereafter, what is the present value of the an..

A 20-year bond has a coupon rate of 8 percent, and another bond of the same maturity has a coupon rate of 15 percent. If the bonds are alike in all other respects, which will have the greater relative market price decline if interest rates increase s..

A 5-year annuity of ten $7,000 semiannual payments will begin 8 years from now, with the first payment coming 8.5 years from now. If the discount rate is 10 percent compounded monthly, what is the value of this annuity five years from now? What is th..

A bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar:
SFr/$ = 1.5960-70
A$/$ = 1.7225-35
An Australian firm asks the bank for an A$/SFr quote. What cross-rate would the bank quote?
..