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Author Question: Your investment banking firm has estimated what your new issue of bonds is likely to sell for under ... (Read 113 times)

notis

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  • Posts: 596
on: Jul 10, 2018
Your investment banking firm has estimated what your new issue of bonds is likely to sell for under several different economic conditions. What is the expected (average) selling price of each bond?
 
  Recession Steady Boom
  Probability .25 .65 .10
  Bond price 970 1,000 1,150
 
  A) 1,000.00
  B) 1,007.50
  C) 1,040.00
  D) 1,100.33

Question 2

The just-in-time inventory control system is just a new approach to the EOQ model which tries to
  produce the lowest average inventory possible.
 
  Indicate whether the statement is true or false


komodo7

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: B
Explanation: B) Expected payoff =  payoffi  probabilityi = .25  970 + .65  1,000 + .10  1,150 = 1,007.50.

Answer to Question 2

TRUE


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