Steve is asked about the best way to study for an exam. He responds that the best way to study is by making flashcards. He easily thinks of all the times he used flashcards and got an A. However, he fails to take into consideration all the times he got an A and did not use flashcards and the times he used flashcards and did not do well. His faulty thinking is an example of

The exam is 45 minutes. You will have an additional 15 minutes to print (if available), scan and upload. If you submit after the allotted time, your exam will be considered late and may incur a late penalty. After you complete your exam, scan your solutions into one .pdf file. Please upload your completed exam file by clicking on the “Add File” button underneath Question 1’s blank answer field. Download exam file here: If your exam utilizes Gradescope’s Student App, do NOT upload to Gradescope. You will only upload your scanned exam file to this D2L quiz.   

Problem 2 – Excel: Bond valuation (14 points) Download the attached Excel file “Problem_2_Template.xslx” (Problem_2_Template-1.xlsx) and answer the questions stated in the Excel file. When you have completed your solutions, please upload the Excel file with your solutions to your e-exam using the name “StudentID_Problem_2.xslx” (e.g., “123456789_Problem_2.xlsx”). When you want to upload an updated version of your solutions, please add a version tag (e.g., “_v2”) at the end of the file name (e.g., “123456789_Problem_2_v2.xlsx”). This problem consists of four parts. Parts a), b), c), and d) yield 3, 4, 4, and 3 points, respectively.

i) Multiple-choice question: Delta Corp. recently had its initial public offering. The offer price of Delta Corp.’s shares was $20 per share. At the end of the first trading day, Delta Corp.’s shares traded at a price of $25 per share. Delta Corp. issued 2 million shares in the IPO. Please select all correct statements. (3 points)  

g) Multiple-choice question: This question is about covenants of debt instruments like loans and bonds. Please select all correct statements. (2 points)  

b) Multiple-choice question: Consider a straight coupon bond and a deferred coupon bond with a remaining maturity of five years from the same issuer. Both bonds pay the same 5% annual coupon, but the deferred coupon bond starts paying interest only in three years. The issuer has no default risk. The risk-free rate is 3% p.a. for all maturities. Please select all correct statements about the two bonds’ prices and yields (as of today). (2 points)

If density increases what happens to speed?

h) Multiple-choice question: Below you will find statements about the beta in the Capital Asset Pricing Model (CAPM). Please select all correct statements. (3 points)

c) Multiple-choice question: Below there are statements about credit ratings. Please select all correct statements. (2 points)

Problem 5 – Excel: Capital Budgeting Methods (11 points) Download the attached Excel file “Problem_5_Template.xslx” (Problem_5_Template-1.xlsx) and answer the questions stated in the Excel file. When you have completed your solutions, please upload the Excel file with your solutions to your e-exam using the name “StudentID_Problem_5.xslx” (e.g., “123456789_Problem_5.xlsx”). When you want to upload an updated version of your solutions, please add a version tag (e.g., “_v2”) at the end of the file name (e.g., “123456789_Problem_5_v2.xlsx”). This problem consists of three parts. Parts a), b), c), and d) yield 2, 3, 3, and 3 points, respectively.