1. Offer some reasons that a company might choose to merge with or acquire another company and discuss some of the implications of overpaying for an acquired company?
2. A $2500 bond sold for $2412 with three years left until maturity. If the coupon rate is 3.9%, what is the yield to maturity? What is the effective yield to maturity?
3. Jessica and Dawn want to sell their business. They have received two offers. If they accept offer A they will receive $61,000 immediately and $20,000 in 3 years. If they accept offer B, they will receive $37,000 now and $3,000 at the end of every 6 months for 5 years. If the interest rate is 6.67%, which offer is better?