1. Present Value of a Perpetuity A perpetuity pays $220 per year and interest rates are 6.7 percent. How much would its value change if interest rates increased to 9.2 percent?
$892.28 decrease
$892.28 increase
$550.00 increase
$550.00 decrease
2. The article below suggests that the Economy of the United States is close to reaching full-employment. Do you agree? If so, what are the implications of a Full Employment in the US in terms of likely monetary policy decisions.
3. What is the current market price of a 20 year, $1,000 corporate bond which pays a coupon rate of 6% per year, if the current market yield is a) 5%, b) 7%, c) 9%?