Please Rewrite these questions in a different wording. I'm not sure how I could pay more. Or can you send more. I'm willing to pay $20.00

1. The opportunity cost rate represents the rate of return oninvestment and the best option available of the same risk investment.

1. The annuity shows the various series of payment for thefixed amount for an certain number of periods. The lump sum payment represents the one single payment that occurred on future time period.Cash flow represents the inflow and outflow of the cash during a certain period. The uneven cash flow represents the series of the cash flows in which amount could fluctuate from time to time.

1. The payment occurred on the end of each period of time is represents by ordinary annuity. The payment occurred starts each period of time that isrepresented by annuity due.

d.If the n equals infinity then that is represent by the perpetuity. The other name of perpetuity is Consol.

e.The outflow is the amount paid and cash inflow is related to amount received. Time line is the graphical representation for showing the time of cash flows.The future value of an uneven cash flow represents by the terminal value.

f.For calculation of FV (Future Value) of single or series payment we used the Compounding. For calculation of PV (Present Value) of single or series payment we used the Discounting.

g.In annual compounding the interest is paid once in whole year. In semiannual interest is paid twice in year. In quarterly interest is paid four times in year. In monthly interest is paid 12 times in year. In daily interest is paid 365 times in year.

h.The EAR under the annual compounding will process the same FV at the end of year 1. The nominal rate is the rate of interest which stated in a contract the other name of the same is APR. The rate charge by the lender is called periodic rate.

j.The amortization is the table which shows the periodic payment of the installments which includes principal and interest. After each payment principal amount is less and Interest payment on the starting of principal balance. The loan which repay in equal installments is called amortized loan

Solution-4-2

The opportunity cost rate represents the rate of return on the investment on the best option available of the same risk investment. In the equation of time value of money I represent the opportunity cost rate. Also this rate is not single rate. This rate changes according to risk and maturity of the investments, according to the inflation this rate also change year to year.

Solution-4-3

The statement is true. Because second series represents the uneven payments but is shows the payment is regular of $400 for the 8 years. The series also focuses on annuity of the $100 for the 10 year also payment of the $100 for year 2 and payment of the $300 for year 3 till the year 10.

Solution- 4-4

This question also true, because there is growth on growth due to the compounding. With the help of below example we are able to learn the same.

$1(1 + i) ¹⁰ = $2

1Using a financial calculator-

N = 10

PV = -1

PMT = 0

FV = 2

I =?

Solving for I = 7.19%

Solution-4-5

If the rate is same then the best option is daily compounding because you can earn interest on interest.

Solution-5-1

a.The bond refers to the promissory note which is issue by the issued governmental department. Treasury bonds issued by the Federal government also not expose as the default risk. The corporation issues the corporate bonds this bond also exposes to the default risk.The local government issued the Municipal bonds. The Foreign governments are issued the foreign bonds, this bond not exposes to the default risk.

b.The face value of the bond is called par value. When the par value is repay to the bondholder then it called the maturity date. The amount which paid to the bondholder as the interest is called coupon payment. The stated rate of interest on the bond is called coupon interest rate.

c.If the bond coupon rate are very then it's called floating rate bonds.If there is no coupon on band then it's called Zero coupon bonds.If the bond is offer on different price less than its par value then bond is called original issue discount bond.

d.If the bonds are called by the company then company must pay higher value then the bond par value this is called call provision. The redeemable bonds are the bond in which the right with investors to sell the bonds back to the corporation. If there is orderly retirement of a bond issue then that is called the sinking fund.

e.At the fixed price the bond convertible into shares of common stock it's called Convertible bonds. If the buyer busy the stock at stated price then that is called a warrants. Income bonds pay interest only if the interest is earned.

f.If the selling price of bond is less than the par value it's called discount bonds, if the selling price of bond is more than the par value it's called premium bonds.

g.If the annual coupon payment divided by the current market price is called the current yield. Rate of interest earned on a bond is called YTM. If the bond is called the earn rate of interest on a bond is called YTC.

h.Debenture holders are general creditors' claims are protected by the property. At the time of bankruptcy Subordinated debentures have claims also designated notes payable or to all other debt.

i.Tax-exempt bond sold by state governments is called development bonds. Insurance company guarantees to pay the coupon and principal payments that is called municipality's bonds insurance.

j.Interest rate equals to the aggregate supply and demand un-risky condition in the economy that is called real risk-free rate. Real risk free rate in addition of premium for expected inflation is called nominal risk-free rate.

k.Addition of premium to the real risk-free rate of interest to compensate for the expected then this condition called inflation premium. If the borrower will not pay the principal and interest then that is called as default risk premium. The firm cash condition called the liquidity.

l.If the bond prices down when interest rates upthis condition called interest rate risk. Maturity risk premium is risk-free rate of interest to compensate for interest rate risk.When a short-term debt security rolled out then reinvestment rate risk occurs.

m.The YTM and term to maturity for bonds of a single risk class is representing by the term structure of interest rates. When the yield to maturity is plotted on the Y-axis with term to maturity on the X-axis than this is called yield curve.

n.If the yield curve slopes upward then this condition called normal if the yield curve slopes upward is downward then this condition called abnormal.

Solution-5-2

The statement is false because when the bond is mature the value of bond is increased also the sensitivity related to change in rate of interest will increase. So the price of short term bonds is not much sensitive in comparison of interest rate changes. If we invested in short term bond then we able to get money return sooner and will re invest for more interest earning.

Solution-5-3

The bonds was purchased by the investors early before the increase the rate now planning to hold the bond till the time of maturity so the yield to maturity is not changed. The yield to maturity only change for the investors who buy all bonds after interest rate change. If yield to maturity is more than the interest rate also more but bond price will less. If the time of bond is more than bond price will less.

Solution-5-4

If the rate of interest is less in the market then the value of the callable bond is not increase in comparison of the regular bonds because issuer of the bond will able to mature the bond any time, if the rate of interest is less than this is the best time to redeemed the bond with more rate of interest and buy new bonds with low interest rate.

Solution-5-5

1.The individual who invest in the process in security then corporation will make payment to that trustee also use the total for retiring of the bond and fresh issuance at the time of maturity.

2.Each year trustee uses the annual payments to retire some portion with the available options but option should be cheaper.