True, False or Uncertain (15 points total or 3 points each) 6….

Question Answered step-by-step True, False or Uncertain (15 points total or 3 points each) 6….  True, False or Uncertain (15 points total or 3 points each)  6. Other things equal, lower coupon bonds have longer durations. 7. If interest rates rise, bond prices rise also.  8. Mary Johnson has become very concerned about a stock market correction and her portfolio and wants to get out of all of her stocks immediately. Mary’s best option would be to enter a limit order.    9. “I would like to buy 500 shares of General Electric at $12 or better.”  General Electric is currently selling for $14 per share on the NYSE. This order will be executed. 10. If a bond’s coupon rate is lower than its yield to maturity, then the bond will sell for less than its face value.   Short answer (25 points)Answer each of the questions below completely. Show all your work. 11. (5 points total) You buy a stock for $10,000. It annually pays a dividend of $500 per year for 10 years after which you sell the shares for $8,000.  What is the annualized return on your investment?    12. (5 points total) Explain the following statement: “The opportunity cost of capital depends on the proposed use of cash, not the source of financing” 13. (5 points total) A corporation issues a bond that promises to pay you semi-annually $55 per year for three years and $1,000 after three years. What is the maximum amount that you would pay for this bond if you wanted to earn 7 percent? 14. (5 points total) You want to buy a new car, but you can make an initial payment of only $2,000 and can afford monthly payments of at most $500. If the interest rate on car loans is 12% compounded monthly and you finance the purchase over 36 months, what is the most expensive car you can afford? If you were to prepay the car loan, how does that affect the amount of interest you pay overtime?  15. (5 Points total) Pablo and Jeannette are saving money for their daughter’s college education. If they make equal annual payments, how much money will they need to deposit at the end of each of the next 16 years in order to have $48,000 (at t=16) if their account pays 6% compounded annually?  Answer each of the questions below completely. Show all your work. 16. (10 points) Is a Corporation only responsible for maximizing profit?   17. (15 points) You have just found the apartment of your dreams. Before you sign the three-year lease, you have to decide how to pay your rent. Your landlord has given you three options: (1) monthly payments of $775.00 each at the end of the month for 36 months with interest compounded monthly; (2) yearly payments of $9,300, due today and due at the beginning of each year after with interest compounded annually; or (3) $28,000 today. You can borrow and invest at an interest rate of 9%. Which option would you choose? Why? 18. (12 points total) You have just won the lottery with an immediate cash payout of $1,000,000. You decide to invest it all for your retirement in 30 years at 10% compounded annually. Beginning at the end of the 31st year and continuing for 24 more years (i.e., 25 withdrawals), you wish to make withdrawals from your retirement fund. How much will you be able to withdraw each of your 25 retirement years if you wish to withdraw an equal amount of money each year? 19. (8 points) Briefly explain the issue short-sellers had with GameStop (GME). What happened to GameStop stock, and why the stock continues to trade for more than its intrinsic value?                                Business Finance FIN 614 Share QuestionEmailCopy link Comments (0)