1. State and explain any two advantage of a monetary economy. State and explain any three functions of money. In monetary economy is an economy where goods and services are exchanged for money. It can avoid double coincidence of wants‚ for example‚ one person is willing to use a bag of rice to get a bag of tea; another person is willing to use a bag of tea to get two apples. These two parties can not trade easily for their goods because in a barter economy people have to find exact goods and
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risk free and nominal rate of interest * Calculation the price and YTM of bonds (prob 6-17 and Prob 6-21)‚ both with annual and semi-annual rates of return * Understand why the required returns of bonds change and be able to explain the relationship between the required return‚ the coupon rate‚ the par value and the price of the bond. * Know the difference between a premium bond‚ discount bond and par bond. * Calculation the price of stock – using no growth‚ constant growth‚ and variable
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Task 1: Assessing loan options for AirJet Best Parts‚ Inc. 1. MPRIME as of 08/2013 was 3.25% APR for National First = 3.25% + 6.75% = 10% APR for Regions Best 13.17% EAR for National First [(1 = ((10%)/2)) 2-1 = 10.25% EAR for Regions Best [(1 = ((13.17%)/12)) 12-1 = 13.9947% 1. Based on the information about I would choose National First because of the lower EAR rate of 10.25% and also because the EAR is compounded semiannually making the EAR even lower over Regions Best who had a higher
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is the issuance of $150 million worth of corporate bonds. A financial advisor predicted that in order for the fast growing company to attract investors‚ it would have to put up collateral to back-up the bond issue. The type of bond the financial advisor suggests is: secured bonds 2. Nickle is concerned about the interest rate risk if the company decides to issue bonds. Nickle would like protection from interest rate fluctuation. Therefore‚ the bond issue’s features should include a(n): coupon rate
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Assets‚ here‚ referred to bonds‚ mortgages fund etc. It took a long time for the economies to realise the problems associated with such types of system. For example‚ in such a framework a commercial bank was permitted to keep aside no liquid capital if it had all government bonds or gold as assets. This was so because such assets were considered safe. Further‚ it was required of them to keep aside small percentages of capital for every mortgage‚ commercial loan or bonds they issued. With the
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Course Project – Part I Task 1: Assessing loan options for AirJet Best Parts‚ Inc. The company needs to finance $8‚000‚000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank | APR | Number of Times Compounded | National First | Prime Rate + 6.75% | Semiannually | Regions Best | 13.17 | Monthly | 1. Assuming that AirJet
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591‚174.8 + 4‚326‚920.42 + 4‚326‚920.42 = $ 13‚111‚510.32 Name: 李耀倫 Student No: 0809853A-B011-2996 Fixed Income Securities 1 8. Calculate for each of the following bonds the price per $1‚000 of par value assuming semiannual coupon payments and explain the price-yield relationship based on your results. |Bond |Coupon Rate |Years to Maturity |Required yield | |A
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Question 5: Evaluate the Put-Warrant/Convertible Bond proposal. Does it solve Intel’s capital structure dilemma? What arguments might be made in favor of it? Intel’s capital structure dilemma was that it was holding too much cash on hand. Eventually‚ there were three available strategies or alternatives that Intel could undertake in terms of cash disbursement policies. First‚ it could continue or expand its market-repurchase program. Secondly‚ Intel could declare dividends to its shareholders
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is traded at the buy and sells. Primary Market- The market in which new‚ as different to be had‚ securities are sold. Investors who pay for shares in a new security issue are purchasing them in the main market. The depositor who buy stocks and bonds in the most important market usually are not engage to pay brokerage charge because cost for selling the issue are built into its value and are absorbed by the issuer. The market is which the original issuer receives funds. As an investment house
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FIN 301 HW Chapter 1 (Odds 1-17) 1. Define shareholder wealth. Explain how it is measured Shareholder wealth is represented by the market price of a firm’s common stock. It is measured by the market value of the shareholders’ common stock holdings 2. Which type of corporation is more likely to be a shareholder wealth maximizer -one with wide ownership and no owners directly involved in the firms management or one that is closely held. A closely held corporation 3. It has been argued that shareholder
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