You are a bond trader and see on your screen the following information on three bonds with annual coupon payments and par value of $100: bond coupon rate (%) maturity (year) ytm(%)
a 0 1 5.00
b 5 2 5.50
c 6 3 6.00
coupon payments are annual.

(a) what are the prices of the above bonds?
(b) construct the current term-structure of spot interest rates.
(c) explain how you would synthetically replicate a zero-coupon bond with a maturity of 3 years and a par value of $100.
(d) what should be the price of the bond so that there is no arbitrage?

You are head of the schwartz family endowment for the arts. you have decided to fund an arts school in the san francisco bay area in perpetuity. every 5 years, you will give the school $ 1 comma 000 comma 000. the first payment will occur 5 years from today. if the interest rate is 5.9 % per year, what is the present value of your gift?

Vintage fun reproduces oldminusfashioned style roller skates and skateboards. the annual production and sales of roller skates is 950 units, while 1,750 skateboards are produced and sold. the company has traditionally used direct labor hours to allocate its overhead to products. roller skates require 2.5 direct labor hours per unit, while skateboards require 1.25 direct labor hours per unit. the total estimated overhead for the period is $114,300. the company is looking at the possibility of changing to an activityminusbased costing system for its products. if the company used an activityminusbased costing system, it would have the following three activity cost pools: the overhead cost per skateboard using the traditional costing system would be closest to: a. $9.31. b. $65.31. c. $25.05. your answer is not correct.d.

Ursus, inc., is considering a project that would have a five-year life and would require a $1,650,000 investment in equipment. at the end of five years, the project would terminate and the equipment would have no salvage value. the project would provide net operating income each year as follows (ignore income taxes.):