Two brothers each open IRAs in 2009 and plan to invest $3,000 per year for the next 30 years. John makes his first deposit on January 1, 2009, and will make all future deposits on the first day of the year. Bill makes his first deposit on December 31, 2009, and will continue to make his annual deposits on the last day of each year. At the end of 30 years, the difference in the value of the IRAs (rounded to the nearest dollar), assuming an interest rate of 7% per year, will be
The following list contains several variables that differentiate college students.
a. Select one variable from the list and then think of a second variable (on the list or one of your own) that should be positively related to the one you selected. Briefly describe how you would do a correlational study to evaluate the relationship.
b. Select another variable from the list and then think of a second variable that should be negatively related to the one you selected. Briefly describe how you would do a correlational study to evaluate the relationship. physical attractiveness intelligence alcohol consumption shyness exam anxiety hours of sleep per night hours of television per week alphabetical position of last name (A = 1, B = 2, and so on)
One year(2014) Alpha issued 10 year bond at par value. The coupon rate of these bond is 7% and pay interest semi-annually. Today (2015) the interest rate on these bonds has decreased to 6.2% (the bonds currently have a YTM of 6.2%). 1. What was the price of these bonds when they were issued(2014)? 2.what is the the price of these bonds if they were sold today?(2015)?
Efficient Market Hypothesis Aerotech, an aerospace technology research firm, announced this morning that it has hired the world"s most knowledgeable and prolific space researchers.
Before today Aerotech"s stock had been selling for $100. Assume that no other information is received over the next week and the stock market as a whole does not move.
1. What do you expect will happen to Aerotech"s stock?
2. Consider the following scenarios:
1. The stock price jumps to $118 on the day of the announcement. In subsequent days it floats up to $123, then falls back to $116.
2. The stock price jumps to $116 and remains at that level.
3. The stock price gradually climbs to $116 over the next week.
Which scenario(s) indicate market efficiency? Which do not? Why?
An FI has estimated the following annual costs for its demand deposits: management cost per account =$140, average account size= $1,500, average number of checks processed per account per month= 75, cost of clearing a check =$0.10, fees charged to customer per check _ $0.05, and average fee charged per customer per month =$8.
a. What is the implicit interest cost of demand deposits for the FI?
b. If the FI has to keep an average of 8 percent of demand deposits as required reserves with the Fed, what is the implicit interest cost of demand deposits for the FI?
c. What should be the per-check fee charged to customers to reduce the implicit interest cost to 3 percent? Ignore the reserve requirements.
OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The T-bill rate is 6% per year.
a. If Brandex stock now sells at $120 per share, what should the futures price be?
b. If the Brandex price drops by 3%, what will be the change in the futures price and the change in the investor’s margin account?
c. If the margin on the contract is $12,000, what is the percentage return on the investor position?
Provide an example where someone can be both excessively optimistic and miscalibrated at the same time.
How much do you have to deposit at the end of each year if you need $20,000 in 10 years, assuming k = 6%?Options:A)1517.36B)1519.36C)1521.36D)1523.36E) none of the above
Problem 1 Lowell Inc. has no debt and its financial position is given by the following data: Assets (book = market) $3,000,000 EBIT $500,000 Cost of equity (Ks) 10% Stock price (P0) $15 Shares outstanding n0 200,000 Tax rate T 40% The firm is considering selling bonds and simultaneously repurchasing some of its stock. It if moves to capital structure with 30 percent debt based on market values, its cost of equity, Ks, will increase to 11 percent to reflect the increased risk. Bonds can be sold at a cost (Kd) of 7 percent. Lowell Inc. is a no-growth firm.
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $2,500. The bankAc€?cs charge for operating the lock boxes is $.40 a check. The interest rate is .013% per day. a-1.
If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) Daily interest saved $ a-2. Is it worthwhile to adopt the system? Yes No b.
What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Minimum reduction in time days
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