1. Explain the terms “direct finance” and “indirect finance” and briefly explain for each three advantages and/or disadvantages. List three types of financial institutions that are involved in direct finance and two that represent indirect finance.
2. Doozer wants to sell you a note with a face value of $1,000,000. The face rate on the note is 10% and is payable in 4 equal payments which include interest at 10%. The note has four years left to run and is seasoned. A. How much would you pay for the note to earn 12%? Amortize it. B. How much would you pay for the note to earn 8%? Amortize it.