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these are questions 1) You have just won $5 million in the state lottery. Your choices are to a) receive a lump sum payment of

these are questions

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1) You have just won $5 million in the state lottery. Your choices are to a) receive a lump sum payment of $1m each year for the next five years, b) one payment of $2.5 million in two years and a second $2.5m payment in four years, or c) a lump sum payment of $4.2 million right now. If market interest rates are currently 4%, which option should you choose?~ 2) Calculate the price of a 10% coupon bond maturing in 3 years with $1000 face value and a yield to maturity of 12%. ~ 3) What is the yield to maturity on a simple loan for $1 million that requires a repayment of $2 million in five years' time? ~ 4) In the last year, Suzie invested in a cannabis ETF and got a real rate of return of 3% (annually), while Andrew invested in corporate bond ETF and got a nominal rate of return of 5%. Inflation was 1%. Who was better off, Suzie or Andrew?~ 5) What happens to nominal bond yields if inflation increases and investors are keen to preserve real returns? What happens to bond prices?<

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