The transaction motive refers to the need to hold


1. The transaction motive refers to the need to hold cash:

1-for unforeseen investment opportunities.

2-for daily operations.

3-for emergency situations.

4-as a safety margin.

2. A $10,000 bond with semi-annual compounding was orginally issued with an 8.4% coupon and 10 years to maturity. What must the price of the bond be if there are 5 years remaining to maturity and a yield to maturity of 8% APR?

3. An investor bought a zero-coupon bond with a $1000 face value and a ten year maturity on December 1, 2010 for $505.62. She sold it after 5 years on December 1, 2015. If the Yield to Maturity when she sold it was 5.6% what price did she sell it for?

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Financial Management: The transaction motive refers to the need to hold
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