Mid1-W09 - Financiad Economics ECN134 Midterm 1 Winter 2009 Prof Farshid Mojaver[20 pts 1 Some Financial Terms and Ideas i What is securitization

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Financiad Economics ECN134 Midterm 1 Winter 2009 Prof. Farshid Mojaver *********************************************************************** * [20 pts] 1- Some Financial Terms and Ideas i. What is securitization? ii. What is financial engineering? iii. What is Credit Default Swap (CDS)? iv. How might CDS have contributed to the current financial crisis? [11 pts] 2-Derivation of the formula for Growing Annuity Show that the present value of a growing annuity that pays a stream of cash flows C and grows at a constant rate g for a fixed number of periods T can be simplified to : [12 pts] 3- Annuity Weak consumer spending has led automobile manufacturers to offer zero interest financing or cash back options to stimulate sales. Suppose you can buy the car of your choice for its negotiated price of $16,200 less $500 cash back, or you can finance the entire $16,200 car cost for 36 months at zero interest. You have the cash necessary to pay for the car in an account that earns a stated annual interest rate of 4%, compounded monthly. You will either finance it or pay cash depending on which is the best deal. a. What is the cost of the financed car to you right now? b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/02/2009 for the course ECON 134 taught by Professor Mojaver during the Summer '08 term at UC Davis.

Page1 / 2

Mid1-W09 - Financiad Economics ECN134 Midterm 1 Winter 2009 Prof Farshid Mojaver[20 pts 1 Some Financial Terms and Ideas i What is securitization

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online