The Board of Governors of the Federal Reserve System has the authority to raise or lower short-term interest rates. Between 2005 and 2006, the Fed aggressively raised the federal funds rate from $2.5 percent in February 2005 to$5.25 percent in June 2006. Assuming that other interest rates also rose, what impact do you think this had on economic investment spending? Explain your response. What do you believe the Fed's goal was?

Decide whether you agree or disagree with the following statements and explain your reasoning: a. Savings and investment are interchangeable terms. b. When I purchase a share of Microsoft stock, I am investing; when I purchase a government bond, I am not. c. Higher interest rates encourage more investment because the returns on those investments are higher.

Your Uncle Joe recently died and left you $\$10,000$ payable when you turn 30. You are now 20 years old. At the moment, the annual rate of interest obtained by purchasing 10-year bonds is $6.5$ percent. Your brother is currently offering you $\$6,000$ in cash to sign over your inheritance. Should you go ahead with it? Explain your response.

According to the text, the majority of stock in the United States is held by households through institutions, and the percentage of institutional holding (as well as the percentage of insider holding) varies depending on the maturity of the company. Choose two publicly traded companies in your area, one of which is relatively new and the other is relatively mature. To find trading information, go to www.finance.yahoo.com and enter each company in the "GET QUOTES" dialogue box, then click on "Key Statistics." Examine each company's share statistics. Describe the difference between the percentages of shares held by institutions and insiders for the two companies.

Bailey, Kaylee, Haley, and Joyce are four sorority sisters who discovered an opportunity to buy an Internet café. To make the purchase, each of the women would have to put up $$ 80,000. The café's revenue is expected to remain stable at $225,000 per year for the foreseeable future. The costs of running the café (excluding the opportunity costs of the investment). $$

Create a graph of an investment demand curve and explain its slope.

Wanda approaches Celia, an analyst with a venture capital firm, about financing her new business venture, a company that will build electricity-generating windmills for residential use. What information should Celia have before deciding whether to fund Wanda's new business?

The Red Sox won the World Series on October 29, 2007. The stock market rose on the same day. The S&P 500 index (an index of the 500 largest corporations in the United States) closed at $1540.98$. Ten-year Treasury notes paid $4.38 \%$ on the government's 10-year obligations. The Fed was set to announce a quarter-point reduction in the fed funds rate to $4.75$ percent. Look up the S&P 500, the 10-year treasury interest rate, and the fed funds rate today. They can be found at http://money.cnn.com. Please explain what has happened to those three numbers since 2007.

What will happen to the present value of money if the market interest rate falls in a year? What happens if market interest rates rise?

How would your responses to the preceding question change if the annual payments were increased to $\$ 2,000,000$ per year for 15 years?

In March 2008, the General Motors building in Manhattan was put up for auction. The skyscraper was expected to fetch more than $3 billion at the time, a record for a single structure. What would you want to know first if you were a real estate investment firm considering bidding on this building? What specific factors would require you to form expectations? What data would you require to form those expectations?

Teresa won the Florida lottery and was given the option of receiving $\$22$ million right away or $\$1.250,000$ per year for the next 30 years. a. How much will Teresa receive in total if she chooses the 30 annual payments? b. Given a 4percent interest rate, what is the present value of the 30 annual payments? Should Teresa choose the upfront payment or the 30 instalments based on this value? c. Given an interest rate of 8percent, what is the present value of the 30 annual payments? Should Teresa choose the upfront payment or the 30 instalments based on this value?

Describe your college or university's capital stock. How would you go about determining its worth? Has your school recently made any significant investments?  If so, describe them. What does your school hope to gain from these investments?

Which of the following is a capital letter, and which is not? Explain your responses. a. A video poker game machine at a local bar that takes quarters b. A $\$ 10$ bill c. A college education d. The Golden Gate Bridge e. The shirts on the rack at Sears f. A government bond g. The Empire State Building h. A savings account i. The Washington Monument j. A Honda plant in Marysville, Ohio