Suppose that there are three zero-coupon bonds, each with a face value of $100 and no default risk. The 1-yr bond has a price of $94, the 2-yr bond at $90 and the 3-yr bond at $83.

a. What are their spot yields, their yields to maturity?

b. What is the price of a 3-yr default-free bond with a 5% annual coupon?

c. What is the forward rate on a 1-yr zero coupon bond 2 years from now?

d. What is the term premium embedded in the forward rate if the expected rate is 8%?

5. The following is house price ($ thousands) and annual crime rate in different neighborhoods of a midwestern city 130 150 200 230 250 280 300 350 320 200 100 220 95 85 60 55 67 35 22 40 10 20 35 15 a. Write the linear regression equation b. Explain the intercept and the slope in practical terms c. How much of the variation in prices is explained by crime rate? d. Are we missing other important determinants of house price? like what?

Western Electric has 28,000 shares of common stock outstanding at a price per share of $71 and a rate of return of 13.40 percent. The firm has 6,900 shares of 7.00 percent preferred stock outstanding at a price of $91.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $380,000 and currently sells for 107 percent of face. The yield to maturity on the debt is 7.84 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent?

10.25%

10.47%

10.67%

11.05%

11.47%

Circle the letter that correspond the best suitable answer:

The table below contains data for a country, which produces only X and Y.

The base year is 2010.

Refer to Table. In 2012,

1. Inflation (show all work)

Name the two measurements of inflation discussed in class

               1)

               2)

Using 2012 as the base year (=100) calculate the inflation rate for 2013

What does currency depreciation mean?

Who is the only legal issuer of bank notes and coins in Canada?

A responsible government believes that the inflation rate is out of control, what fiscal policies could they enact?

Consider an individual making choices over two goods, x and y with initial prices px= 2 and py= 1, with income I= 100: (a) If an individual has the utility function u(x;y) = 3x+y. what would the total, income and substitution effects of a price of x increase to 5? Show your work (b) If an individual has the utility function u(x;y) =x^2+y^2; what would the total, income and substitution effects of a price of x decrease to 0:50? Show your work

1. Like the monopolist, you are a price-maker. But suppose you can practice access pricing. Demand is P=50-0.05Q and you can produce each unit of output for $30 a unit. That is, AC=MC=$30. To make the story right each potential customer has this demand of P=50-0.05Q. You need to draw a graph to answer some parts below.
   1. What first price or access price should you charge?

   2. What is the 2^ndprice or price per unit of output that you should charge?
   3. How much output will each customer buy?

   4. What are your profits from each customer?

Suppose that price of sugar, a major input for making Coca – Cola (Coke), decreased. Using two separate competitive supply/demand diagrams for Coke market, and Pepsi market, illustrate and briefly explain the probable effects of the decrease in the price of sugar: on equilibrium price, and equilibrium quantities, in the Coke and Pepsi market (assume Pepsi uses sweetener instead of sugar). What happens to the revenues of Coke, and Pepsi producers/sellers? [Hint: Coke and Pepsi are substitutes. First show how the decrease in the price of sugar will affect the Coke market. Then based on what happens to Coke prices, determine what will happen to the Pepsi market]

An airline regularly running a flight between Chicago and Zurich has 100 business travelers who are willing to pay $1000 for a ticket and 50 tourist travelers who are willing to pay only $500 for a ticket. There is a $20,000 fixed associated with running the flight, which is fixed regardless of the number of passengers on the plane. a.Suppose the airline must set a single ticket price. What is the optimal ticket price? How much revenue does the airline earn and how much profit does it make?b.Now suppose that the airline can price discriminate by charging different prices to business travelers and to tourists. What are the airline’s revenue and profit now?c.The airline attempts to price discriminate in the following way. It initially sets the ticket price at $1000, so that business travelers will buy tickets immediately. A few days before the flight, it lowers the price to $500, hoping that tourists will buy a ticket. What problem would the airline would run into if it applied this strategy repeatedly?

Create a python program that:

• Creates a sales receipt, displays the receipt entries and totals, and saves the receipt entries to a file
  • Prompt the user to enter the
    • Item Name
    • Item Quantity
    • Item Price
  • Display the item name, the quantity, and item price, and the extended price (Item Quantity multiplied by Item Price) after the entry is made
  • Save the item name, quantity, item price, and extended price to a file
    • When you create the file, prompt the user for the name they want to give the file
    • Separate the items saved with commas
    • Each entry should be on a separate line in the text file
  • Ask the user if they have more items to enter
• Once the user has finished entering items
  • Close the file with the items entered
  • Display the sales total
  • If the sales total is more than $100
    • Calculate and display a 10% discount
  • Calculate and display the sales tax using 8% as the sales tax rate
    • The sales tax should be calculated on the sales total after the discount
  • Display the total for the sales receipt