1. J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 20 years, pays semi-annual coupons, and the yield to maturity is 7.5%, what is the value of the bond?
Answer provided. Please explain and how to do it.
2. Why is it important to discover more than just the numbers of passerby’s in a traffic count?
3. In practice we do not observe Beta but stock prices, market index, and risk-free rate, etc. How do we use these observed information to calculate Beta?