The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates.

Based on the pure expectations theory, is the following statement true or false?

1. The pure expectations theory assumes that investors do not consider long-term bonds to be riskier than short-term bonds.

True

False

2. The yield on a one-year Treasury security is 5.1500%, and the two-year Treasury security has a 6.9525% yield. Assuming that the pure expectations theory is correct, what is the market’s estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.)

10.0159%

11.1581%

8.7859%

7.468%

3. Recall that on a one-year Treasury security the yield is 5.1500% and 6.9525% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.45%. What is the market’s estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.)

8.9745%

7.8724%

9.9979%

6.6915%

4. Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the market’s estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.)

6.45%

7.10%

6.69%

6.61%

Objective: The purpose of this assignment is to introduce declaration of list objects, the forstatement and the def keyword used to define functions.

Problem: Write a Python module (a text file containing valid Python code) named p3.py. This file will contain the following.

•  Definition of a list containing strings which are in turn integers. These integers represent years, which will be used as inputs to the next item in the file

•  Definition of a function named isLeap. This function must accept a string containing an integer that will be interpreted by this function as a year. If the year is prior to the introduction of the Gregorian calendar, it will print “Not Gregorian.” If the year is aGregorian year and a leap year, it will print “Leap year!”. If the year is a Gregorian year butnot a leap year, it will print “Not a leap year!”.

•  A for loop that will call isLeap with each of the year strings in the list of year strings defined above.

  While you are free to use any name for your list of year strings, you must use the name isLeap for the function.

  Submission: Submit the code you write in a text file named p3.py to the Blackboard folder for this assignment.

  Also –

  As you implement the code for this assignment, consider what might be added to the testing process and program output to make it clearer what the unit testing is accomplishing. For up to five points extra credit, you also submit a Word document describing any improvements you think would help in testing the function you created, including any additional output that would be useful or testing cycles.

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Question: 1. Windham Corporation has current assets of $500,000 and current liabilities of $625,000. Windha...

1. Windham Corporation has current assets of $500,000 and current liabilities of $625,000. Windham Corporation's current ratio would be increased by:

2. During the year just ended, the retailer James Corporation purchased $433,000 of inventory. The inventory balance at the beginning of the year was $184,000. If the cost of goods sold for the year was $457,000, then the inventory turnover for the year was:

3. Deflorio Corporation’s inventory at the end of Year 2 was $167,000 and its inventory at the end of Year 1 was $152,000. The company’s total assets at the end of Year 2 were $1,471,000 and its total assets at the end of Year 1 were $1,420,000. Sales amounted to $1,450,000 in Year 2. The company’s total asset turnover for Year 2 is closest to:

4. Mayfield Corporation has provided the following financial data:

5. Freiman Corporation's most recent balance sheet and income statement appear below:

6.

Deacon Corporation has provided the following financial data from its balance sheet and income statement:

The company’s times interest earned ratio for Year 2 is closest to:

Find the present values of these ordinary annuities. Discounting occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent.

1. $700 per year for 12 years at 8%.

   $   

2. $350 per year for 6 years at 4%.

   $   

3. $1,000 per year for 6 years at 0%.

   $   

4. Rework previous parts assuming they are annuities due.

   Present value of $700 per year for 12 years at 8%: $   

   Present value of $350 per year for 6 years at 4%: $   

   Present value of $1,000 per year for 6 years at 0%: $   

Please, if possible, can you explain how to find the answers on the BAII Plus Calculator. Thanks in advance.  

EXERCISE #4: Optional: Put-Call Parity: C – P = S – PV(K), PV(K) = K / (1+r)
A-B. The stock is at 50. One-year interest rates are at 3%.
A. A one-year call struck at 52 trades at $4. What must be the price of a one-year 52 put? $ ...........................................................................

B. A one-year call struck at 50 trades at $5. What must be the price of a one-year 50 put? $ ...........................................................................

C. The stock is at 51. The strike is 55. A one-year call struck at 51 trades at $4. A one-year put struck at 55 trades at 1.38. What must be the interest rate?

...................................................... %

ABC Inc of Portland plans to build a water purification plant overseas. After conducting some study, the following info was gathered:

a. Initial Investment $7,000,000

b. Projected Cash flows: year 1: $850,000, year 2: $975,000, year 3: $1,000,000, year 4: $1,500,000, year 5: $2,000,000, year 6: $3,000,000

c. Cost of capital: 15 percent

Given that info determine the following:

1. NPV and IRR and recommend whether plant should be built or not.

2. the value overseas appreciates by 4 percent per year over the next six years, repeat part 1 and discuss go or no go

Sales for the Forever Young Cosmetics Company (in $ millions) are as follows:

(a) Develop a three-year moving average.

(b) Develop a four-year moving average.

(c) Develop a five-year moving average.

(d) Develop a seven-year rmoving average.

Alpaca Corporation had revenues of $315,000 in its first year of operations. The company has not collected on $20,200 of its sales and still owes $28,300 on $97,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $14,000 in salaries. Owners invested $20,500 in the business and $20,500 was borrowed on a five-year note. The company paid $4,900 in interest that was the amount owed for the year, and paid $8,900 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 36%. (Assume taxes are paid in the same year).

Compute the cash balance at the end of the first year for Alpaca Corporation.