You have received a $10,000 bonus from the company you work for and plan on investing that $10,000 into a bond maturing in 10 years. Interest earned on a bond is subject to a 28% federal income tax. The current interest rate is based upon a 10-year U.S. Treasury with a yield of 2.23% and interest rates are expected to remain stable over the ten-year period. You have the following options to choose from:

Option A: A $10,000 municipal bond that was originally a twenty-year issue. The bond is selling at a premium $11,650, earns an annual coupon of 6.5%, and matures in ten years.

Option B: A $10,000 corporate bond that was originally a fifteen-year issue. It is investment grade and is selling on a discount at $9,500 with an annual 3% coupon and matures in ten years.

Option C: A $10,000 new issue U.S. Treasury zero-coupon bond selling at par value. It matures in ten years and has a yield of 2.23%.

Option D: A $10,000 high-yield corporate bond selling at par value. It has ten years until maturity and earns an annual coupon of 7.93%.

Assume that the annual coupon is paid semi-annually. Based upon the above options, which bond, based on a strictly financial standpoint, should you invest your money in and why? Are there any other factors that may affect your decision? If so, explain.

What is the relationship between the convertible bond and enterprise value? What is the effect of convertible bond on enterprise value?

Knowledgeable option investors rarely buy simple calls or puts, but combine different options in order to tailor their risk/return profile. They may give up some potential return in order to have less risk, etc. Choose one of the following strategies and explain why you would want to use the strategy, how you would do it, and when you would make or lose money. Most of these have both a long and short version.

a. Straddle

b. Strangle

c. Iron Condor

d. Spread

e. Butterfly

Ms. Tweeter is buying a house with a cost of $350,000. She will make a down payment of $20,000 on the house, and the rest will be paid for with a mortgage loan. Her mortgage loan has an APR of 4.9% compounded semi-annually, with a weekly payment schedule and a time horizon of 20 years. The first payment is due in one week's time. How much principal have you paid off after 5 years?

Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be set up in unused space in Shrieves’ main plant. The machinery would incur $10,000 in shipping charges, and it would cost an additional $28,000 to install the equipment. The machinery has an economic life of 4 years, and Shrieves has obtained a special tax ruling that places the equipment in the MACRS 3­year class. The machinery is expected to have a salvage value of  15% of initial outlay after 4 years of use.

The new line would generate incremental unit sales per year for 4 years at an incremental cost of $108 per unit in the first year, excluding depreciation. Each unit can be sold for $200 in the first year. The sales price and cost are both expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. The firm’s tax rate is 35%, and its overall weighted average cost of capital is 10%.

1. Construct annual incremental operating cashflow statements.
2. Estimate the required net working capital for each year and the cash flow due to investments in net working capital.
3. Calculate the after­tax salvage cash flow.
4. Calculate the net cash flows for each year. Based on these cash flows, what are the project’s NPV, IRR, MIRR, PI, payback, and discounted payback? Do these indicators suggest that the project should be undertaken?
5. What does the term “risk” mean in the context of capital budgeting; to what extent can risk be quantified; and, when risk is quantified, is the quantification based primarily on statistical analysis of historical data or on subjective, judgmental estimates?
6. Perform a sensitivity analysis on the unit sales, salvage value, and cost of capital for the project. Assume each of these variables can vary from its base­case, or expected, value by +/-10%, +/-20%, and +/-30%.
   1. Include a sensitivity diagram, and discuss the results.
7. Assume that Sidney Johnson is confident in her estimates of all the variables that affect the project’s cash flows except unit sales and sales price. If product acceptance is poor, unit sales would be as in the table and the unit price would only be $160; a strong consumer response would produce sales as in the table and a unit price of $240. Johnson believes there is a 25% chance of poor acceptance, a 25% chance of excellent acceptance, and a 50% chance of average acceptance (the base case).
   1. What is the worst­case NPV? The best­case NPV?
   2. Use the worst­, base­, and best­case NPVs and probabilities of occurrence to find the project’s expected NPV, as well as the NPV’s standard deviation and coefficient of variation.
8. Shrieves typically adds or subtracts 3 percent­ age points to the overall cost of capital to ad­ just for risk. Should the new line be accepted?

Assume your company's pension plan promises to pay you $57,000 per year starting when you retire in 33 years (the first 33 years from now) and increase the payment by 2% every year after the first to compensate for inflation. You hope to live 21 years after you retire (you collect 22 payments). If your interest rate is 6%, what is the value today of your pension plan?

You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $70,000, and it would cost another $17,500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $24,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $10,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $63,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%.

1. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent.
   $  
2. 
   
3. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest cent.
   Year 1: $  
   Year 2: $  
   Year 3: $  
4. 
   
5. If the WACC is 12%, should the spectrometer be purchased?
   -Select-YesNo

An FI has purchased a $211 million cap of 8 percent at a premium of 0.60 percent of face value. A $211 million floor of 5.1 percent is also available at a premium of .65 percent of face value.

a. If interest rates rise to 9 percent, what is the amount received by the FI? What are the net savings after deducting the premium?
b. If the FI also purchases a floor, what are the net savings if interest rates rise to 10 percent? What are the net savings if interest rates fall to 4.1 percent? (Negative amounts should be indicated by a minus sign.)
c. If, instead, the FI sells (writes) the floor, what are the net savings if interest rates rise to 10 percent? What if they fall to 4.1 percent? (Negative amounts should be indicated by a minus sign.)

What appeals you about working in the financial services Industry, particularly at BNY Melon?

You have a short position in one corn futures contract. Each futures contract calls for the delivery of 5,000 bushels of No. 2 yellow com. The initial margin was $2,500 and the maintenance margin is $1,250. At the close of trading yesterday, the futures price was $5.23 per bushel and the balance in your margin account was $1 ,750. Today, the settlement price for corn futures is $5.43. What is the balance in your account at the end of today's trading? Assume that you made the minimum deposit necessary if there was a margin call.

A) $1,750

B) *$2,500

C) $3,250

D) $ 1 ,500

Looking for the process work to understand why the solution is B) $2,500.

Suppose Intel stock has a beta of 1.53​, whereas Boeing stock has a beta of 0.91. If the​ risk-free interest rate is 3.5% and the expected return of the market portfolio is 10.9%​, according to the​ CAPM,

a. What is the expected return of Intel​ stock? Answer in percentage

b. What is the expected return of Boeing​ stock? Answer in percentage

c. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing​ stock?

d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing​ stock? (There are two ways to solve​ this.) (Answer in percentage)

The Government of Canada 2-year coupon bond has a face value of $1,000 and pays annual coupons of $30. The next coupon is due in one year. Currently, the one and two-year spot rates on Government of Canada zero coupon bonds are 5% and 5.5%. Use this information to answer part a) and b).

a) What is the correct price for the coupon bond at time zero (immediately)?

A) $925.46

B) $952.41

C) *$953.98

D) $971.68

E) $1009.54

b) What is the expected price for the coupon bond at year one (after the first coupon is paid)?

A) $953.98

B) *$971.69

C) $976.30

D) $980.95

E) $1009.54

Looking for the process work to understand why the solution for part a) is $953.98 and for b) is $971.69.

Paladin Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.7 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.85 for every $1.00 increase in sales. Paladin's profit margin is 4%, and its retention ratio is 35%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent.

please Help!Thank you!;)