IMPORTANT NOTE: The questions must
be address in its full context. These questions are an opportunity to go
outside the box to demonstrate your analytical, integrative, problem- solving
and critical thinking skills using the knowledge acquired in your readings. As
a result, it is very important to pay close attention to the questions and be
able to conduct your discussions in the context of your question. – Please
keep this in mind when you complete this assignment.
You must expand
your ideas further. Analysis must be deep and very instructive.
FOLLOWING QUESTIONS. Each question should be answered in at least 300
words. Quality of content and use of course and
outside-of-course resources to support your position or analysis. The
answers should not be in the form of essay, just straight to the point- Work
must be original and cite your sources.
Please be sure
to answer the question completely but specifically in well-written complete
Use the link to
help you answer these questions, and conduct your own research
Textbook, found at:
1. In the discussion question for Chapter 4 your uncle
gifted you $1,000,000. Now assume you have received those funds and
decide to invest all of the $1,000,000 into bonds. From the information
in this chapter what type of bonds will you invest in (select at least three
types) and give the reasons for your selection.
2. Assume you are trying to determine the yield to
maturity of three different bonds. Also assume you purchased each of the
three bonds for $10000. The first was a zero-coupon bond; the second was
a bond with 2% annual coupons; and the third bond is with 8% annual
coupons. Each bond is for 4 years and they are all default free.
Discuss what formula you would use in this evaluation and some of the factors
to be considered in making this decision.
1. You have cashed in all of the bonds from your
investment in Chapter 6 and now have $1,250,000 in cash. There are two
potential projects you are considering as new investments. Each of these
two projects would require one-half of your $1,250,000 at the beginning and the
remaining amounts of your funds equally over the next two years before any
income will be generated from either project. You can only select one of
the two projects. What additional information will you need to know in
order to apply the concepts from this chapter in your evaluation of each
project? Which method of evaluation will you use in your analysis of
these two projects?
2. You have decided to use the internal rate of return
(IRR) approach to help you select from among the two projects under
consideration. Discuss the various pitfalls identified in Chapter 7
related to use of the IRR method of evaluation.