N 19 QUESTION 1 [15 MARKS]

(a)Jane purchases a car worth $ 35,000. She decides to pay $ 5000 down and agrees to pay the remaining over the next 10 years in 10 equal annual payments. She will pay an interest rate of 13% annually. Calculate the amount of each payment that Jane has to effect?

[7 marks]

(b)Mary is considering to rent an office space and plans to take a monthly loan of 500 for a period of four years with first payment made today. Considering an annual discount rate of 3.5%, compounded monthly, determine the present value of the loan.

[8 marks]

N 19 QUESTION 3 [10 MARKS]

"The stock market efficiency is the idea that equity prices of listed companies reveal all the data regarding the company value" (Fama, 1965). Special considerations are given in terms of information about management performance and whether the prevailing prices accurately reflect such information.Critically discuss this statement.

N 19 QUESTION 5 [30 MARKS]

(a) Calculate the yield to maturity of a bond with a face value of $1,000 purchasedfor $920. The bond earns interest of 10 % and it will mature in 10 years.

[5 marks]

(b) The OMG bond has a $1,000 face value. The coupon rate is 6%, with interestpaid semi-annually, and the bond having a maturity period of 5 years. If Investors require a yield of 8%, what is the bond's market value today?

[5 marks]

(c)"Access to funds plays a very important role in the growth of a business organisation.Firms may resort to different internal or external sources of funds to meet different purposes towards the achievement of their ultimate goal".

Discuss this statement.[20 marks]