1. You took out a loan of $1000 from your bank. Your yearly cashflow payment is $106.08 for the next 30 years. What is the yield to maturity for this loan?
2. Explain the main characteristics of Debt, Equity, and Preferred Equity. And identify the trade-offs between each one of those sources of financing.
3. Suppose there exist two bonds. The first is a T-bond. The second is a municipal bond which has a coupon rate of 7%. Your income tax rate is 35%. At what coupon rate will you be willing to buy the T-bond?