Provide one argument in favor of and one against the idea that the Fed was responsible for the housing price bubble of the early 2000s. Be specific with your answer and build your strongest argument using only ONE argument on each side of the debate.  

What is the present value of $135,000 to be received after 30 years with a 11.75 percent discount rate?  (You must submit your hand written work for this problem.)

A fixed coupon bond has 15 years to maturity and a coupon rate of 7.5%  Coupon payments are made semi-annually.  Assuming  a current market rate of 7%, what is the present value of the bond?  (HINT – assume this is a $1,000 bond) * Draw a timeline of show all cashflows for this bond.  Submit the timeline with your hand-written work. *

Calculate the duration of a 8.5% annual coupon bond with 6 years to maturity.  Assume the market interest rate is 4%. Show your work on your hand-written page.  In the space below, write your answer as a percent but do not include the percent sign. For an answer of 8.75 years you would simply write 8.75.

Calculate the duration of a 9% annual coupon bond with 6 years to maturity.  Assume the market interest rate is 7%. Show your work on your hand-written page.  In the space below, write your answer as a percent but do not include the percent sign. For an answer of 8.75 years you would simply write 8.75.

A fixed coupon corporate bond with 30 years to maturity has a price quote of 93.5, with payments made annually.  What coupon rate would a company expect for this bond if you expect the yield to be about 7.5%? (hint – Assume the quote should be used as percentage of par.  You do not need to consider this bond as quoted in 8ths)    * Please show your work clearly on your hand-written page.  Partial credit will be given if I can follow your work. *  

You are a commercial bank lender. Explain the current interest rate environment for banks and explain which type of loans you should want to make for the betterment of your institution.  Discuss the impact of interest rates on the bank balance sheet.   As a bank manager, do you prefer low interest rates or high interest rates?  Explain why.  

You are a commercial bank lender. Explain the current interest rate environment for banks and explain which type of loans you should want to make for the betterment of your institution.  Discuss the impact of interest rates on the bank balance sheet.   As a bank manager, do you prefer low interest rates or high interest rates?  Explain why.  

ABC Corporation just announced a 2-for-1 stock split.  Prior to the split the company had a market value of $3.6 billion with 90 million shares outstanding.  The split conveys no new information about the ABC Corporation. To receive full credit or to earn partial credit, please do your work on the hand-written page.  (Submit with all your hand-written work as the last problem on the exam.)  Prior to the split, what was the price per share of ABC Corporation stock? What is the value of ABC Corporation after the split? How many shares will be outstanding after the split? What will the price per share be after the split?    

Calculate the duration of a 10% annual coupon bond with 5 years to maturity.  Assume the market interest rate is 8%. Show your work on your hand-written page.  In the space below, write your answer as a percent but do not include the percent sign. For an answer of 8.75 years you would simply write 8.75.