1. What are three risk areas that contributed to the failure of American International Group Inc (AIG)?
2. What is the yield to maturity of a corporation callable bond with 13 years to maturity, a coupon rate of 8% per year a 1000 par value and a current marker price of 1250? assume semi annual coupon payments
3. Under each of the following term structure theories, what is the shape of the yield curve if interest rates are expected to decrease?
A) Unbiased expectations:
B) Modified Expectations:
4. Calculate the yield to maturity (YTM) for a one-year coupon bond with a purchase price of $800, a face-value of 1,000, and a current yield of 10%.
Please show how you got to the answer and the the values for FV, PV, PMT, I and N as applicable.