Questions:
Q1. Describe the factors that determine the level and shape of the yield curve.
Q2. Explain how valuing preferred stock with a stated maturity differs from valuing preferred stock with no maturity and calculate the price of a share of preferred stock under both conditions.
Q3. Describe how distinguishing between variable and fixed costs can be useful in forecasting operating expenses.
Q4. What is the effective annual yield of a bond that promised an annual yield of 7.5% if this bond pays coupons twice a year?
Q5. What is the EAC of two projects: project A, which costs $230 and is expected to last two years, and project B, which costs $300 and is expected to last three years? The cost of capital is 12%.