Bond a pays $8,000 in 28 years. bond b pays $8,000 in 14 years. (to keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)

suppose the interest rate is 5 percent.

using the rule of 70, the value of bond a is approximately and the value of bond b is approximately

.

now suppose the interest rate increases to 10 percent.

using the rule of 70, the value of bond a is now approximately and the value of bond b is approximately

comparing each bond’s value at 5 percent versus 10 percent, bond a’s value decreases by a percentage than bond b’s value.

the value of a bond (falls/rises) when the interest rate increases, and bonds with a longer time to maturity are (less/more) sensitive to changes in the interest rate.

Your team has identified the risks on the project and determined their risk score. the team is in the midst of determining what strategies to put in place should the risks occur. after some discussion, the team members have determined that the risk of losing their network administrator is a risk they'll just deal with if and when it occurs. although they think it's a possibility and the impact would be significant, they've decided to simply deal with it after the fact. which of the following is true regarding this question? a. this is a positive response strategy. b. this is a negative response strategy. c. this is a response strategy for either positive or negative risk known as contingency planning. d. this is a response strategy for either positive or negative risks known as passive acceptance.

Capital financial corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. customers that take over 45 days to pay their bills are not considered acceptable accounts for a loan. the current prime rate is 16.50 percent, and capital charges 3.50 percent over prime to charming as its annual loan rate. a. determine the maximum loan for which charming paper company could qualify.

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. what does this best illustrate? a. diseconomies of scale b. principal-agent problem c. experience-curveeffects d. information asymmetries