Author Question: Your aunt dies and leaves you 1M in her will, but it must stay in trust for 10 years. You want to ... (Read 23 times)

karen · **on:** Jul 10, 2018

Your aunt dies and leaves you 1M in her will, but it must stay in trust for 10 years. You want to spend it now, so you go to the Bank to borrow against the bequest. You offer the 1M to repay interest and principal at the end of ten years.

The Bank wants to earn 5 on its loan, so how much will it offer you today?
A) 613,913.25
B) 617,283.95
C) 675,564.17
D) 558,394.78
E) 1,000,000.00

Question 2

Espresso Petroleum Inc. has a contractual option to buy back, prior to maturity, bonds the firm issued five years ago. This is an example of what type of bond?

A) Putable bond
B) Callable bond
C) Convertible bond
D) Junior bond