1. If a corporate bond is quoted at 95 that means it is trading at 95% of face value. In the case where the face value is $1000, the cost to buy each bond is $955.

2.

Assume you think a boom and a recession are equally likely to happen, a 50-50 chance of either.

State of Economy	Probability of State of Economy	Security Returns if State Occurs
		Security L	Security U
Recession	0.50	-20%	30%
Boom	0.50	70%	10%

3.

From the list below determine how much is net working capital:

Cash $120

A/R 50

Sales 200

Rent expense 50

A/P 80

Interest payable 15

Capital 300

4. You were lucky to find an investment that provide a return of 6%. Because this rate is acceptable to you, you decided to invest $10,000. How much will you have in 5 years?