1. A bond investor is considering two 10 year maturity bonds both rated AAA: the municipal bond is yielding 1.15% and the corporate bond is yielding 2.10%. At what marginal tax rate would the bond investor be indifferent between the two bonds? Enter your answer rounded off to two decimal points.
2. You want to form a price-weighted technology stock index using Apple, Google, and Microsoft. Apple's adjusted closing price for 2015 is $112.75 and for 2014 is $100.78;
Google's adjusted closing price for 2015 is $647.82 and for 2014 is $582.36;
Microsoft's adjusted closing price for 2015 is $43.52 and for 2014 is $44.25.
What is the annual return for your price-weighted technology stock index for 2015?
3.You want to form avalue-weightedtechnology stock index using Apple, Google, and Intel. Apple's adjusted closing price for 2015 is $112.75 and for 2014 is $100.78;
Google's adjusted closing price for 2015 is $647.82 and for 2014 is $582.36;
Intel's adjusted closing price for 2015 is $28.54 and for 2014 is $33.92. The additional information that you gathered is their market values at the end of 2014 or beginning of 2015; in billions of dollars,
Apple's market value is $574.72 B, Google's market value is $399.23 B, and Intel's market value is $164.35 B. What is the annual return for your value-weighted technology stock index for 2015?
4. You purchased 100 shares of Amazon common stock on margin at $512.89 per share. Assume the initial margin is 50% and the
maintenance margin is 30%. One year later, the stock price closes at $772.44. If the broker's call loan rate is 2.00%, what is your return on equity?
Note that Amazon pays no dividends.
5. You sold short 100 shares of British Petroleum common stock on margin at $33.54 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $27.01, and it has paid cash dividends of $2.40 per share. What is your return on equity? Ignore margin interest.
Show work in excel.