1. A firm with a current value (cost) of $800 and will return $1,000 next year. The firm also has a potential project that costs $500 and will return $550 next year, but the firm does not have the money to invest and must raise it from outside investors. However, outside investors mistakenly believe the firm will be worth $820 in one year without the project and $13,030 with the project. For simplicity, assume a zero discount rate. Does the project have a positive NPV? Acting on behalf of existing shareholders, should you take the project?

If nominal and inflation rates were 11% and 1.5%, respectively, what was the true real return? Please show equation and work.

What does the Altman Z score tell us with respect to company financial distress? How should we use such a tool as managers? (300 words minimum)

Suppose you purchase a​ 10-year bond with 6.1 % annual coupons. You hold the bond for four​ years, and sell it immediately after receiving the fourth coupon. If the​ bond's yield to maturity was 4.7 % when you purchased and sold the​ bond,

a. What cash flows will you pay and receive from your investment in the bond per $ 100 face​ value?

b. What is the annual rate of return of your​ investment?

You are buying a house and will borrow $225,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.3 percent. Alternatively, she tells you that you can “buy down” the interest rate to 4.05 percent if you pay points up front on the loan. A point on a loan is 1 percent (one percentage point) of the loan value. How many points, at most, would you be willing to pay to buy down the interest rate?

Complex Systems has an outstanding issue of ​$1,000 par-value bonds with a  9​% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date.

a.  If bonds of similar risk are currently earning a rate of return of 8​%, how much should the Complex Systems bond sell for​ today?  

b.  Describe the two possible reasons why the rate on​ similar-risk bonds is below the coupon interest rate on the Complex Systems bond.

c.  If the required return were at 9​% instead of 8​%, what would the current value of Complex​ Systems' bond​ be? Contrast this finding with your findings in part a and discuss.

Assume that the Financial Management​ Corporation's ​$1000 par-value bond has a 7.400% ​coupon, matures on May​ 15, 2027, has a current price quote of 110.636 and a yield to maturity​ (YTM) of 6.934%. Given this​ information, answer the following​ questions:

a.  What was the dollar price of the​ bond?

b.  What is the ​bond's current​ yield?

c.  Is the bond selling at​ par, at a​ discount, or at a​ premium? ​ Why?

d.  Compare the​ bond's current yield calculated in part b to its YTM and explain why they differ.

Ques 1) Pension plan queries:

We decided that we need to specify the type of retirement income we want and make plans to accomplish our goal. Our goal is to plan for 25 years of retirement, at $150,000 per year, but we want to receive the

$150,000 at the beginning of each year of our retirement. So, to reach our objective, for the next 30 years, we need to set aside the right amount of money as an annual constant contribution into a retirement fund at the end of each of those years. So in total, there will be 25 annual payments (withdrawals) of 150,000 each received at the beginning of each month, preceded by 30 annual contributions made at the end of each period. (The last contribution time may correspond with that of the first withdrawal time).

We discussed this in general terms with another pension adviser, and she advised us to assume an average nominal annual rate of return of 8.50%, compounded annually, for the entire 55-year period.

Ques. How much money would we need in our pension plan when we retire after 30 years of work to make our pension dream come true? Please use (display + name) the excel function/ formula used for each yellow cell.

Ques 2) In order to accumulate this amount of money, how much would we need to deposit in our pension plan at the end of each year, for each of the next 30 years of work, if we contributed a constant amount each year? Please use (display + name) the excel function/ formula used for each yellow cell.

Ques 3) If the inflation rate for the next 30 years were to be 2% per year (assuming country’s Bank manages to meet its target inflation of about 2%), what annual income now would provide the same purchasing power as a $150,000 annual income in 30 years? Please use (display + name) the excel function/ formula used for each yellow cell.

A government decision maker is faced with making a choice among alternatives, all of which come with costs. Think of an example of such a situation and explain what the official should do.

A government official is faced with the dilemma of doing something for the public good that will have adverse consequences for himself. Think of an example of such a situation and explain what the official must do.

1a.) What is the price of a T-bill that matures in 270 days if the discount rate is 0.9% and par is $1,000?

1b.) What is the yield on a T-bill maturing in 180 days with a $990 current price and a $1000 par value?

Please show work and original formulas

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.1%. The probability distributions of the risky funds are:   

The correlation between the fund returns is .1560.

Suppose now that your portfolio must yield an expected return of 9% and be efficient, that is, on the best feasible CAL.

a. What is the standard deviation of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b-1. What is the proportion invested in the T-bill fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

1. Which of the following is not a CPP benefit? a. Retirement pension b. Survivor benefit c. Death benefit d. Allowance for survivor

2. Demi is a Canadian citizen. She has an RRSP account in which she has currently invested $5,000,000 in mutual funds. The real return on her mutual funds is expected to be 7% over the ten years until her retirement. If she doesn’t save any more between now and retirement, how much will her retirement shortfall be if she needs $15,000,000 at retirement? a. $9,835,757 b. $3,000,000 c. $5,164,243 d. She will not have a shortfall.

3. Which of the following statements is not true about retirement savings? a. No tax is paid now on money paid into sheltered savings plans. b. Funds in sheltered savings plans grow before tax. c. No tax is ever paid on money paid into sheltered savings plans. d. Unsheltered savings are bought with after-tax dollars.

4. Marie is deciding if she should retire now at age 61 or wait until age 70. Her health is very good – she expects to live to 90. Which of the following statements is true about her CPP retirement income if she expects to live to age 90 and will be eligible to collect the full retirement benefit at age 65 and is using a discount rate of 3%? a. She should retire now. b. She should wait until age 70. c. It doesn’t make any difference. d. This cannot be assessed without knowing the amount of the full retirement benefit.

5. Which of the following statements about the steady-state financing rate is not true? a. It means CPP rates will not go above 4.95%. b. Up to half of the CPP fund is being actively managed. c. It has been an unfunded pension plan. d. In a few years, the CPP fund will be fully funded like other pension plans.

6. Which of the following statements is not true about OAS? a. It is indexed quarterly. b. It is based on years lived in Canada. c. It is based on income earned while you were working d. It might be collected while living outside Canada.

7. Early retirement means the earliest one can retire and: a. Receive the same total pension income as would be received at age 65. b. Receive an unreduced pension based on the actual number of years of service. c. Collect the full CPP retirement benefit. d. Collect the early OAS benefit.

8. Which of the following statements is not true about CPP contributions for salaried employees? a. They are a tax credit. b. They are tax deductible. c. The effect of an increase in salary on CPP contributions is inconsequential for most people who are doing detailed retirement planning. d. The employer pays an amount equal to that of the employee.

9. Which of the following statements about RPP is not true? a. Most DCPP are in the private sector. b. There are many DBPP in the private sector. c. Employers who provide DBPP may have to make large contributions to ensure the plan is fully funded due to a drop in the stock market. d. The limit on benefits received is the same for DCPP and DBPP.

10. Which of the following statement(s) are correct? a. Defined benefit plans can generate surpluses. b. Defined contribution plans cannot generate surpluses. c. Deferred profit sharing plans are a type of defined contribution plan. d. All of the above are true.

11. Which of the following statements is not true? a. The maximum possible retirement benefit from a DBPP depends on the maximum allowable years of service. b. The maximum possible retirement benefit from a DCPP is the same as for a DBPP. c. There is no maximum benefit for DCPP. d. If a retiree dies, the spouse can receive some of the retiree’s pension benefits.

12. Henry’s company provides him with a defined contribution pension plan. The maximum amount of pension he can receive for each year of service is: a. 2% p.a. times his YMPE b. 2% p.a. times his pensionable earnings c. $1,722.22 d. There is no maximum

13. Which of the following is not true? a. Before age 65, an employee must have actually retired to receive a pension. b. After age 65, an employee can receive both a pension and earned income from the same company. c. A person who is collecting a pension can still make contributions to the plan to increase future benefits. d. A person age 73 who is still working cannot make contributions to a RPP.

14. For a defined benefit pension plan, all of the following are true except: a. Benefits might increase each year to reflect inflation. b. Benefits might be integrated with CPP retirement income. c. Benefits must end when the retiree dies. d. A common-law spouse can receive benefits after the retiree dies.

15. Normal retirement age means: a. An employee cannot retire with a full pension before age 60. b. The age at which an employee can received the full amount for each year of service. c. Age 65. d. There is no minimum number of years of service.

An investment pays $2,500 per year for the first 4 years, $5,000 per year for the next 3 years, and $7,500 per year the following 9 years (all payments are at the end of each year). If the discount rate is 11.85% compounding quarterly, what is the fair price of this investment?

Work with 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.

Group of answer choices

$31,750.35

$33,694.25

$26,566.62

$39,201.97

$32,398.32

What is one part of risk management which you would like to learn more about and why?

(Could you solve this by using a financial calculator and just telling me what I need to input) You would like to have the current equivalent in terms of today's buying power of $3,000 in years 4 5 and 6 How much would you have to invest in years 1, 2 and 3 (the same amount in each year in nominal terms) to fund this level of real consumption? You expect inflation to be 3% per year over that time period. Your investments earn 7% per year in nominal terms

Answer Choices:

$2,449 $2,779 $2,893 $2,836