a) An investment company has $1.05 million of assets, $50,000 of liabilities, and 10,000 shares outstanding. Suppose that the fund pays off its liabilities while at the same time the value of its assets double. How many shares will a deposit of $5,000 receive?
b) Consider a zero coupon bond which has no coupon payments with 3 years remaining to maturity and $1,000 par value. Assume the investor rate of return on this bond is 13%. What will be the appropriate price of these bonds?