ABC's transactions for the year ended December 31, 2XX1 included the following:

• Purchased real estate for $1,300,000 cash which was borrowed from a bank.

• Sold available-for-sale securities for $950,000.

• Paid dividends of $1,200,000.

• Issued 200 shares of common stock for $200,000.

• Purchased machinery and equipment for $190,000 cash.

• Paid $720,000 toward a bank loan.

• Reduced accounts receivable by $192,000.

• Increased accounts payable by $390,000.

What is ABC's net cash used in financing activities for 2XX1? 

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Question 1 (13 marks) Answer all parts of the following question. Show your work using the relationships used in class. Yield(DD/MM/YYYY) The following are Canadian government bond yields. Yield 10/05/19 Yield 10/05/20 Yield 10/06/20 12-Month 0.1 0.09 0.10 2-Year 0.31 0.56 0.60 3-Year 0.67 1.13 1.20 a) (2 marks) Under the Expectations Theory, calculate the expected (1-year) interest rates implied by the 10/05/20 yield curve for next year and the year after that; i.e. find i5o21 and i2o22- Liquidity Premium Incorporated uses the Liquidity Premium Theory. On 10/05/20 they forecasts that (1-year) interest rates are going to be higher over the next two years at .19%; i.e. io21 = ižo22 = 0.19%. b) (2 marks) What risk premiums are they using? (c) (2 mark) Using the liquidity premiums you have calculated in part (b), update the nominal interest rate forecast for 2022 using the data from the next day (10/06/20). (d) (2 marks) Nowadays Germany and France in Europe are issuing 10-year bonds of negative yields. Why investors still buying them? Give two reasons. Question 1 (13 marks) Answer all parts of the following question. Show your work using the relationships used in class. Yield(DD/MM/YYYY) The following are Canadian government bond yields. Yield 10/05/19 Yield 10/05/20 Yield 10/06/20 12-Month 0.1 0.09 0.10 2-Year 0.31 0.56 0.60 3-Year 0.67 1.13 1.20 a) (2 marks) Under the Expectations Theory, calculate the expected (1-year) interest rates implied by the 10/05/20 yield curve for next year and the year after that; i.e. find i5o21 and i2o22- Liquidity Premium Incorporated uses the Liquidity Premium Theory. On 10/05/20 they forecasts that (1-year) interest rates are going to be higher over the next two years at .19%; i.e. io21 = ižo22 = 0.19%. b) (2 marks) What risk premiums are they using? (c) (2 mark) Using the liquidity premiums you have calculated in part (b), update the nominal interest rate forecast for 2022 using the data from the next day (10/06/20). (d) (2 marks) Nowadays Germany and France in Europe are issuing 10-year bonds of negative yields. Why investors still buying them? Give two reasons.

Answer rating: 100% (QA)

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