1. If the overall stock market is sometimes volatile, how might that situation influence the way corporations choose to compensate their senior executives with less volatile incentives? Discuss the different types of compensation plans they might use.
2. Assume that Jane Richards pays income taxes at a 35 percent rate. She currently owns a not-for-profit (municipal) bond that pays 5 percent interest. What interest rate would have to be set on a for-profit (corporate) bond to produce the same amount of usable (after-tax) income?
3. You would like to have $56,000 in 7 years time. To raise this amount, you plan to invest $10,000 now, $6,000 in year 1 and equal amount in years 3-6. Solve for the unkown amount each year in years 3-6 if the interest rate is 8% per year.