Winter 2011 - Week 6 - Handout (Otavio)

# Winter 2011 Week - 5 If my yield curve inverts this is a sign of a possible(recession boom 6 My preferred stock has recurring yearly dividend

This preview shows page 1. Sign up to view the full content.

Chapter 7, Chapters 8 and 9 Mini-Quiz 1. If I have initial costs of \$1000, and each donut sold makes me \$1.00, but each donut costs \$0.50 to make, how many donuts do I need to sell in order to break even? 2. I've invented a great game. If you roll 1-3 on a dice, I give you \$10. If you roll 4-6, you give me \$20. Isn't this a great game? Why don't you play? (Prove why or why not with math) 3. I have a zero-coupon bond with a face value of \$1000. It matures in 5 years. With a yield to maturity of 5%, what is it worth right now? 4. The yield curve describes the relationship between ___________ and ___________
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 5. If my yield curve inverts, this is a sign of a possible (recession / boom). 6. My preferred stock has recurring yearly dividend payments of \$1.00 a share. At a 5% interest rate, what is the value of the stock? 7. A semiannual bond with a \$1000 par value has a 7% coupon rate, a yield to maturity of 10% and 5 years to maturity. What is the current price of this bond? 8. What are some of the differences between bonds and stocks? How does the market for bonds and stocks differ? What are the similarities?...
View Full Document

## This note was uploaded on 03/28/2011 for the course ENGR 110 taught by Professor . during the Winter '10 term at UCLA.

Ask a homework question - tutors are online