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No 1: Part a: What kinds of personal financial decisions have you made that involve compound interest? Part b: Explain the channels through which funds
No 1: Part a: What kinds of personal financial decisions have you made that involve compound interest? Part b: Explain the channels through which funds flow in the economy. Question No 2: In connection with the United States Bicentennial, the Treasury once contemplated offering a savings bond for Rs.1,000 that would be worth Rs.1 million in 100 years. Approximately what compound annual interest rate is implied by these terms? Question No 3: Part a: In what sense is the treatment of bonds and preferred stock the same when it comes to valuation? Part b: Peking Duct Tape Company has outstanding a Rs.1,000-face-value bond with a 14 percent coupon rate and 3 years remaining until final maturity. Interest payments are made weekly. What value should you place on this bond if your nominal annual required rate of return is (i) 12 percent? (ii) 14 percent? (iii) 16 percent
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