1. What is the term structure of interest rates? Explain the three theories that describe the shape of the yield curve.
2. What would be the current fair price of a bond, if it is priced to yield 3% percent, has a $10,000 face value, has 30 years to maturity, pays semiannual coupon payments, and has a coupon rate of 4% percent?
3. Discuss the motives for capital budgeting decision.