Difference between money market and capital market

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Reference no: EM132068244

The question below assigned as is a multiple choice question. I would like this question answered but also show the work and breakdown of how you came up with the answer. Also, I would like to know how to input this question into a Financial Calculator (ex. BAII Plus Texas Instrument) .

If you want to have $20,000 in your saving account in 5 years, how much should you deposit today? Assume the interest rate will be 8% compounded annually.

a. $12,000

b. $13,537

c. $13,612

d. $14,286

Questions 1,2,3,4, and 5 are to be fully written out answers and shown work for computations where needed.

1. Describe the distinguishing characteristics between money market and capital market.

Money markets: wholesale markets for short-term debt instruments resembling money itself

2. Describe the major advantages and disadvantages of three mains forms of business organizations: the proprietorship, the partnership and the corporation.

3. Please explain the agency problem between shareholders and managers in corporate finance and how compensation plan, board of directors and takeovers can possibly mitigate the problem.

4. You want to buy a house. You can make an initial payment of $50,000 and can afford monthly payments of at most $2000. If the APR on mortgage is 4.49% and you finance the purchase over 30 years, what is the maximum price you can pay for the house?

5. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $100,000 at age 65, the firm will pay the retiring professor $800 a month until death. If the professor's remaining life expectancy is 25 years. What is the effective annual rate (EAR)?

Reference no: EM132068244

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