a. A newly issued bond has a maturity of 10 years and pays a 7% coupon rate (with coupon payments coming once annually). The bond sells at par value. What is the duration of the bond?

b. Find the actual price of the bond assuming that its yield to maturity immediately increases from 7% to 8% (with maturity still 10 years)

3. Discuss the role investment bankers play in the issuance and sale of new securities.

4. Identify the three methods that the federal reserve system uses to control money supply in the economy, and explain when and how these methods are applied.

1. Why do firms set upper and lower limits on their cash balance? What factors affect these limits?

2. How is WACC different from the expected rate of return calculated using CAPM?

3. Firm A and Firm B have the same betas but Firm A has a much higher total risk (standard deviation of returns) than the Firm B. The dividends and dividend growth rates for both firms are the same. Do we expect Firm A’s price to be greater or less than Firm B’s price?

4. What is the relationship between the expected rate of return and the rate used to discount cash flows? Re-write the formula for stock price P=D/(r-g) to provide an expression for the expected rate of return.

5. Is it true that if a stock possesses a higher expected rate of return then it must be a better investment?

Which of the following medications can cause a dangerous block of the AV node if dosing is excessive?

Question options:

Stock 1: The Binkelman Corporation has just announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company’s earnings, currently $5 per share to grow by 50 percent per year for the next two years, by 25 percent per year for the following two years, and by 8 percent per year, thereafter. Blinkelman does not currently pay a dividend, but it expects to pay out 20 percent of its earnings beginning two years from now and to continue to pay dividends at the same level. The required rate of return for this company is 20 percent for now. Analysts think that it will stay at that level for the next five years and then it decreases to 15%.

Stock 2: Sports Novalties, Inc. has experienced an explosion in demand for its featured football novelties. The firm currently pays a dividend of $0.25 per share. This dividend is expected to increase to $0.75 per share one year from now. It is expected to grow at a rate of 15% per year for the following three years and then growth rate is expected to decrease to 10% and stay at that level. The required return for Sports Novalties is 16% and estimated to stay at that level for three more years and it will be 12% thereafter.

a)Calculate the price of Stock 1 today.

b)Calculate the price of Stock 2 today.

c) Suppose Stock 1 is selling for $25 in the market right now. Decide whether Mary should include Stock 1 in the portfolio of her clients or not and briefly justify your decision.

d)Suppose Mary purchased Stock 2 today with an intention of selling it a year later. Suppose a year has passed and Mary is getting ready to sell her shares. Today, the company announced experiencing some financial difficulties and the required rate of return on company shares suddenly changed to 15% indefinitely. Calculate the new price for Stock 2. Calculate the return she earned on her investment during her 1-year holding period and decompose this return into dividend yield and capital gains yield components.

A consumer with strictly convex preferences chooses an interior optimal bundle A as the solution to the budget constrained, utility maximization problem. If the price of one of the goods increases subsequently and we compensate the consumer with just enough income to reach the same utility level (but no higher) achieved with bundle A prior to the price increase, then bundle A must also be affordable (in the budget set) after the price increase with the additional income compensation. True or False?

A key Lean Principle is Create Flow. Identify three tools that support or promote flow in a manufacturing company. Describe how they help the flow of production.

1. Create a network diagram and project schedule (illustrated in a Gantt chart) from the following set of tasks. Use the task number, duration, and dependencies of each task given and construct a schedule so that the project is completed in the least number of days possible. Include a management reserve of approximately 10%.

2. Draw the Network Diagram and calculate the early and late schedules

3. What tasks, in order, are on the critical path?

4. Draw the Schedule as a Gantt Chart?

5. What does the graphical representation of the WBS look like for the project?  

Note: only the terminal graph nodes are shown in the tasks above; construct logical section titles where needed!

5. Santa Corp. has 5,000 zero-coupon bonds outstanding. The bonds have a face value of $1,000, 4 years to maturity, and are currently trading at $822.70. The firm also has 750,000 common shares outstanding. The shares are currently priced at $21.75 each and yesterday paid a dividend of $2.24. The firm’s most recent annual financial statements show net income of $2.80 mln, shareholders’ equity of $26.67 mln, and a marginal tax rate of 26%.

   1. What are the weights of debt and equity in Santa Corp.’s capital structure? [2 points]

   2. What is Santa Corp.’s required return on equity? [4 points]

   3. What is Santa Corp.’s weighted average cost of capital? [4 points]

A 8.6-kg cube of copper (cCu = 386 J/kg-K) has a temperature of 750 K. It is dropped into a bucket containing 5.1 kg of water (cwater = 4186 J/kg-K) with an initial temperature of 293 K. 1) What is the final temperature of the water-and-cube system? K Submit 2) If the temperature of the copper was instead 1350 K, it would cause the water to boil. How much liquid water (latent heat of vaporization = 2.26 × 106 J/kg) will be left after the water stops boiling? kg Submit 3) Let's try this again, but this time add just the minimum amount of water needed to lower the temperature of the copper to 373 K. In other words, we start with the cube of copper at 750 K and we only add enough water at 293 K so that it completely evaporates by the time the copper reaches 373 K. Assume the resulting water vapor remaining at 373 K. How much water do we need ?

Most publicly traded companies are examined by numerous analysts. Locate analysts’ ratings about a company of your choice by visiting a website such as Yahoo Finance (Links to an external site.). Provide a comparison over time and across companies in the same industry by answering the following questions:

• How many analysts rated the company?
• What are analysts predicting in terms of earnings and revenues?
• How do the estimates compare against historical results?
• How do the growth projections for the company compare with the average projections for the S&P 500?

Explain the difference between a strike and a lockout. Include an explanation of different types of strikes, and how the possibility of a stike/lockout can be addressed as part of a labor agreement.

General Electric has 10 million shares of common stock with a book value of $1 per share and a current market price of $25 per share. The company’s beta is 1, the risk free rate is 3% and the market rate is 9%. The firm’s outstanding bonds have a total face value of $75 million, a maturity of 10 years, a 4% annual coupon, and are selling currently for 101% of par value. The marginal tax rate is 35%. What discount rate should General Electric use to evaluate its projects? (You MUST show all your work) 21. What is the weight of equity? A) 57.3% B) 42.7% C) 76.7% D) 23.3% 22. What is the weight of debt? A) 57.3% B) 42.7% C) 76.7% D) 23.3% 23. What is the rate of equity? A) 9% B) 3% C) 12% D) 4.5% 24. What is the rate of debt? A) 4.0% B) 3.8% C) 1.9% D) 7.6% 25. What is the discount rate for the firm? A) 7.5% B) 4.1% C) 3.8% D) 2.8%

Almost half of the US states have enacted so-called Right to Work laws. Explain what these laws are, and whether they are fair to unions and union members. Look at the issue from both the union's point of view, and from the point of view of employees who don't want union representation.