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Test 2

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Louisiana State University
FIN 3715

Test 2Tuesday February 07 2012139 PM Most important slide 1bullet one BonusBonds of War2008one of 8 worst years in americaFirst sock market crashJohn Law espacped briain Arrived in france o seek foruneJohn Law was in control of all france taxes mint debt the mississippi company import of tobacco LA colony and asian and african trade Law also owned mezine palace Several plantations in LA 100shares in MS company oNot bad for a guy who was accused of a jew gambler and possible spy Now his bank and company operated in the same building which he also ownedHe would print more money dcreased value of frank which cause value of the MS company to be worth more Dividen on MS comp shares was paid for by products coming out of LA colonyThe first ever ponzi schemeNamed after charles ponziBernie Madeofflost 50 billionThinks this should be called the madeoff scandal New orleans named to flater the duke of orleansPump and dumpyou make it soud good while you are actually dumping the stuff Law called upon duke to cut the prices fromtoWithin weeks the share prices were in free fall By dec shares had lost 900 of valueLaw fled the countryspent time in vience Orleans fell on his swordNapoleon bonapart emerged from it Less now ishe financed napoleons ultimate downfallAka the empoeror of 19h centruy bond marke He bosted he was arbiuaryed of peace and war Had a dynasty Nathan roschild Founder of the london branch of he bigges bank in the world Battle of waterloobritain and franceoBattle of financeoBritian based on debt sold a lot of bond roschild family made first million by specialiing on how the outcome would work on this bondsoOnce lied so that someoe would sell their bonds and he can buy them up oFranceplunderRoschild very good at banking through war Different brothers in different cities and banks spread outdiversificationUtliple curecenys Its good and balances things out Wellington bough up a lot of gold hinking thatWellington called battle of waterloo something Courrierhe go news 48 hours ahead In finacne I is called informaion assyemty I know something you dont knowthis is about nathan Now we have laws that try to go against tha insider tradingOnly way out of something was nathan could use gold on the bond market He knew that the war had already been won Nathans gamble sent prices of bonds sourrying upwards Confederacybtirhplace of financial engineeringNorth had money South had to do things that were ou of the box New orleans was the outplace for souths most important outputcotton Cotton was a scheme to bring bond market into the world Similar to italian city state In NYC roschild person was a northern democrat They hesiated about lending with the south Roschild decide to stay outSouth used cotton to blackmail the most powerful countrybritain More than 80 came from southern states Southern emposed an embargo on all shipments to liverport Strategy worked cotton prices sored so that the cotton bond prices sored When hey took nola it was the turning point because if you wanted otton gyou had to go through the unio blockade Embargo You risk of either increasing the price or decreasing the supply You see a real estate bubble and collapse You see people goinging against the value of the home against the asumption that they will always go up in value Greates private residence built in the 18h centuryyet many things are missing There use to be golden statues Duke richard Owned over 6000 acres in england ireland and jamaciaWas spending over his incomeToday stowe is a private boarding schoolKey Concepts and SkillsBe able to compute the future value of multiple cash flowsBe able to compute the present value of multiple cash flowsBe able to compute loan paymentsBe able to find the interest rate on a loanUnderstand how interest rates are quotedUnderstand how loans are amortized or paid offChapter OutlineFuture and Present Values of Multiple Cash FlowsValuing Level Cash Flows Annuities and PerpetuitiesComparing Rates The Effect of CompoundingLoan Types and Loan AmortizationMultiple Cash Flows Future Value Example 61Find the value at year 3 of each cash flow and add them togetheroTodays year 0 CF 3 N 8 IY 7000 PV CPT FV881798oYear 1 CF 2 N 8 IY 4000 PV CPT FV466560oYear 2 CF 1 N 8 IY 4000 PV CPT FV4320oYear 3 CF value4000oTotal value in 3 years881798466560432040002180358
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