1. When Janet Yellen talks about raising interest rates, the stock market usually drops. Why do you think this happens?
2. Thelma has not budgeted wisely. As a result, she needs a quick loan from Louise. Thelma needs $2,400 and Louise has agreed to lend the $2,400 if Thelma makes one payment to Louise in the amount of $3,000, to be paid four months from now. What is the EAR on this loan?
3. Wiss Company is about to issue a zero-coupon bond. The projected yield for the bond is 3?%. If the par value of the bond is ?$1,000 what is the price of the bond using a semiannual convention if the maturity is 20 ?years?