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1. A number of factors give riso to different interest rates or yields being observed for different types of debt instruments. What are these factors? 1. A number of factors give riso to different interest rates or yiclds being observed for different types of debt instruments. What are these factors? 2. What is the purpose of financial markets? How can this purpose be accomplished efficiently? 3. What is the distinction between the money market and the capital market? Is the distinction real or artificial? Discussion questions (12 points) When a project is evaluated on the basis of its total risk, who determines whether the project is acceptable? How? Is share price likely to be maximized? Calculaton questions (12 points per question. a total of 48 points) 1. Jack is 62 years old and recently retired. He wishes to provide retirement income for himself and is considering an annuity contract with the Philo Life Insurance Company. Such a contract pays him an equal-dollar amount each years that he lives. For this cash-flow stream, he must put up a specific amount of money at the beginning. According to actuary tables, his life expectancy is 18 years, and that is the duration on which the insurance company bases its calculations regardless of how long he actually lives. If Philo Life Insurance Company uses a compound interest rate of 10 percent in its calculations, what ust Jack pay at the outset for an annuity to 1. A number of factors give riso to different interest rates or yields being observed for different types of debt instruments. What are these factors? 1. A number of factors give riso to different interest rates or yiclds being observed for different types of debt instruments. What are these factors? 2. What is the purpose of financial markets? How can this purpose be accomplished efficiently? 3. What is the distinction between the money market and the capital market? Is the distinction real or artificial? Discussion questions (12 points) When a project is evaluated on the basis of its total risk, who determines whether the project is acceptable? How? Is share price likely to be maximized? Calculaton questions (12 points per question. a total of 48 points) 1. Jack is 62 years old and recently retired. He wishes to provide retirement income for himself and is considering an annuity contract with the Philo Life Insurance Company. Such a contract pays him an equal-dollar amount each years that he lives. For this cash-flow stream, he must put up a specific amount of money at the beginning. According to actuary tables, his life expectancy is 18 years, and that is the duration on which the insurance company bases its calculations regardless of how long he actually lives. If Philo Life Insurance Company uses a compound interest rate of 10 percent in its calculations, what ust Jack pay at the outset for an annuity to

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