1. What is a financial instrument and what is their role in the economy?
2. What are financial markets and how do they work?
3. What are financial institutions and why are they so important?
4. explain how money markets are used by institutional investors?
5. explain the valuation and risk of money market securities?
6. Stock prices are driven by three types of factors explain with example?

Activity #07

What will be the impact, if Company Z's sales manager decided to offer 30-day credit terms to customers, rather than 60-day credit terms?

Activity #08

Suppose,

Debt = 50%, Ps = 5%, Cs = 45%, WACC = ?

[using previous calculated results].

Activity # 09:

Assume that the company pays no corporate tax

For example: MgMiller plc needs $1m to invest in building and machines and the required return for an all equity firm at that level of systematic risk is 15%. The expected annual cash flow is a constant $150,000 in perpetuity. Assume all cash flows are returned to investors (both shareholders and bondholders). Let's also assume three different capital structure for MgMiller.

Structure 1: all-equity ( 1m shares selling at $1 each)

Structure 2: $500,000 of debt capital at 10% rate plus $500,000 of equity capital (500,000 shares at $1 each)

Structure 3: $700,000 of debt capital at 10% rate pus$300,000 of equity capital (300,000 shares at $1 each)

Activity # 04

Let the market value of a firm's debt is35million and E represent the market value of the firm's equity which is 65million , K_E = 0.15 and K_d=0.05. If the corporate tax rate is 30%, then average cost of capital after tax ofWAAC ?

Activity #10

Determines the level of returns to investors, return on assets (ROA) and return on equity (ROE) based on the information of BRAC bank. The back has a corporate tax T_C of 35% and expected earnings before interest and tax (EBIT) of 1m. It would fund its project with all equity under plan I. Under plan II, the company would have 4m of debt, Under plan II the company would have 6m debt.The cost of debt K_D is 10%. The bankhas total asset total value of 8m.

Activity #11

A govt. bond is expected to mature in two years and has a current price of $950. What is the bond's YTM if the par value is 1000 and the coupon rate is 10%.

If the bond is sold after 1 year for $970 what is the holding period yield.