Q: You have been offered a job with an unusual bonus structure.
You have been offered a job with an unusual bonus structure. As long as you stay with the firm, you will get an extra $70,000 every seven years, starting seven years from now. What is the present valu...
See AnswerQ: Suppose Oppenheimer Bank is offering a 30-year mortgage with an
Suppose Oppenheimer Bank is offering a 30-year mortgage with an EAR of 6.80%. If you plan to borrow $150,000, what will your monthly payment be?
See AnswerQ: Assume the inflation rate is 3% APR, compounded annually.
Assume the inflation rate is 3% APR, compounded annually. Would you rather earn a nominal return of 5% APR, compounded semiannually, or a real return of 2% APR, compounded quarterly?
See AnswerQ: You have just taken out a $20,000 car loan
You have just taken out a $20,000 car loan with a 6% APR, compounded monthly. The loan is for five years. When you make your first payment in one month, how much of the payment will go toward the prin...
See AnswerQ: You are buying a house and the mortgage company offers to let
You are buying a house and the mortgage company offers to let you pay a “point” (1% of the total amount of the loan) to reduce your APR from 6.5% to 6.25% on your $400,000, 30-year mortgage with month...
See AnswerQ: Assume the current Treasury yield curve shows that the spot rates for
Assume the current Treasury yield curve shows that the spot rates for 6 months, 1 year, and 1 1/2 years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a $1000...
See AnswerQ: You own 20% of the stock of a company that has
You own 20% of the stock of a company that has ten directors on its board. How much representation can you get on the board if the company has cumulative voting? How much representation can you ensure...
See AnswerQ: Suppose a ten-year, $1000 bond with an 8
Suppose a ten-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading for a price of $1034.74. a. What is the bond’s yield to maturity (expressed as an APR with semiannual compoundin...
See AnswerQ: Suppose a five-year, $1000 bond with annual coupons
Suppose a five-year, $1000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond’s coupon rate?
See AnswerQ: You have purchased a 10% coupon bond for $1040.
You have purchased a 10% coupon bond for $1040. What will happen to the bond’s price if market interest rates rise?
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