ENGIN 120 Study Guide - Midterm Guide: Arbitrage, Texas Instruments Tms320, C Corporation
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Sid: ______________________________ (2pts: any communication with other students during the exam (including showing, viewing or sharing any writing) is strictly prohibited. Any violation will result in a score of 0 points for the exam: answer each of the following questions in the space provided. Bank b offers a risk-free interest rate of 4% on both savings and loans. Problems show all work: (12pts) consider two risk free bonds that pay cash flows over the next two years and that have the current market prices shown here. Page 4 of 8: (12pts) the british government has a consol bond outstanding paying 500 per year forever. Page 5 of 8: (12pts) you are shopping for a car and read the following advertisement in the newspaper: "own a new spitfire! ,000. " (assume that you must make the annual payments at the end of each year. ) You have shopped around and know that you can buy a spitfire for cash for ,000.
