Categories: Convertible: Caesars Entmt Corp - CZR4551670 Non-convertible: T-Mobile USA Inc - TMUS4307780 Credit rating – any investment grade: Kraft Heinz Foods Co - BRK4362687 Credit rating – any non-investment grade (e.g., junk or high-yield): Carnival Corp - CCL.GC Maturity – maturity within 10 years: Chobani LLC - CHBI4480359 Maturity – longer than 10 years: CVS Health Corp - CVS.HA Callable: Nissan Motor Co., LTD. - NSAN5044178 Puttable: SHERWIN-WILLIAMS CO MEDIUM TERM NTS BOOK - SHW.GE In your paper, Use your chosen bonds from Week 1 and calculate the Macaulay and modified durations for each bond. Show your calculations. Choose two bonds, and construct an equally weighted portfolio. Determine the cash flow yield of this portfolio. Determine the Macaulay duration of the portfolio using the weighted average of time-to-receipt of the aggregate cash flows method. Determine the modified duration of this portfolio. Please see section 3.5 of Chapter 4 for an example. Using all your bonds, construct an equally weighted portfolio. Determine the average Macaulay duration of this portfolio using the weighted average of the individual bond durations that comprise the portfolio. Determine the average modified duration of this portfolio using the weighted average approach. Estimate the percentage loss in the portfolio’s market value if the (annual) yield-to-maturity of each bond goes up by 25 basis points (bp), 50 bp, and 100 bp. Research and review at least two articles about the current market expectations for interest rates, which have been published within the last six months. Based on these articles, Summarize your research and analysis, and describe whether this bond portfolio is likely to gain or lose market value in the next six months. Estimate how large this gain or loss might be. Based on this opinion, recommend one change to this bond portfolio to lower the interest rate risk of the portfolio. You may remove one bond and replace it with one bond currently available on the market. You must continue to have a total of eight bonds in the portfolio.

You are a new economist for a major financial institution, and you’ve been invited to speak as a guest lecturer for a Freshman Finance course at the local university.Respond to the following in a minimum of 175 words:Share how you would describe the overall purpose and mechanics of both primary and secondary markets.How would you explain the way the performance of your company is influenced by the activity of the markets you described?After your initial post, choose a classmate’s approach that is different from the approach you’d take on the guest lecture. What additional information might you include in your lecture based on your classmate’s approach?

1. Formulas using symbols 2. “Draw” timelines and graphs to illustrate your answers. You can construct them in Excel and then copy them into this file. 3. You must write a short VERBAL conclusion at the end of each problem summarizing your answer in words. Verbal answers are not a substitute for the quantitative solution. Question 1 Mark Mezos is deciding on one of two career choices, before retiring in 20-year time. Choice 1 Mark can go to a prestigious graduate school for two years and obtain a degree. Including tuition and living expenses, he expects to pay $65,000 at the end of each year for two years while at school. After graduating, he expects to land a demanding job that pays $150,000 at the end of the third year. He expects his earnings to grow at a constant rate of 5% each year (so at the end of the fourth year he expects to earn , etc.). He will retire in 18 years after finishing graduate school. Choice 2 Mark can continue in his present job. He expects to be paid $78,000 at the end of the current year, and expects his salary to increase by 10% every year, paid at the end of each year (i.e. at the end of the second year her salary will be $78,000´1.1, and so on). He expects to work 20 years before retiring. Suppose that Mark’s discount rate is 12%. Which career should he choose? Question 2 Consider the following risk-free T-bill and coupon bonds available for sale in the bond market (assume annual coupons): Maturity (in years) Price Coupon rate 1 999 T-bill (zero coupon bond) 2 1003 2% 3 1008 3.5% Question 3 Tresla Corporation is experiencing rapid growth. Dividends are expected to double in each of the next two years, grow at 20% per year over three years after that, and then 5% percent per year indefinitely. The required return on this stock is 15%, and the stock currently sells for $730 per share. a.Tresla just paid the dividend. What was it? b.“Draw” the time line table) showing dividends paid by Tresla over the next 7 years. c.What would be the price of Tresla be if it did not grow and continued to pay the same dividends as it had just paid. d.What is the present value of Tresla’s growth opportunities (PVGO)? Question 4 Suppose that you want to buy a 2-year 5% coupon bond, which pays semi-annual coupons and costs $997. Find the yield to maturity on this bond (YTM) Find the effective annual rate of return that you earn on this bond (EAR). Question 5 Consider the following mutually exclusive projects: T=0 1 2 3 Project X: -100 20 30 90 Project Y: -100 80 30 20 Find IRRs for both projects.Find the cross-over rate.Construct a graph, where you will show the NPV of each project as a function of its discount rate (i.e NPV on the vertical axis and r on the horizontal axis). Both NPVs should be on the same graph. This graph is the NPV schedule.Please describe as fully as possible which project is the best and under which circumstances.