Part II Problem Solving (65 PLEASE SHOW YOUR WORK FOR FULL CREDITS) 1. Describe the distinguishing characteristics between money market and capital market. 2. Describe the major advantages and disadvantages of three mains forms of business organizations: the proprietorship, the partnership and the corporation. 3. Describe the major differences between investment banks and commercial banks. 4. You are interested in buying a $1,000 par value bond with 30 years to maturity and a 10% coupon rate that is paid semiannually. How much should you be willing to pay for the bond if the required rate of return (discount rate) is 11%? 5. You want to buy a new car. You can make an initial payment of $2,500 and can afford monthly payments of at most $300. If the APR on auto loans is 6% and you finance the purchase over 60 months, what is the maximum price you can pay for the car? 6. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $100,000 at age 65, the firm will pay the retiring professor $800 a month until death. If the professor's remaining life expectancy is 25 years. What is the effective annual rate (EAR)