1) Spencer Tools would like to present the special product to its best customers. Though, firm wishes to limit its maximum potential loss on this product to firm's initial investment in project. The fixed costs are evaluate at= $21,000, the depreciation expense is= $11,000, and contribution margin per unit is $12.50. Determine the minimum number of units firm must pre-sell to make sure its potential loss doesn’t exceed desired level?

i) 1,220 units
ii) 1,680 units
iii) 2,215 units
iv) 2,560 units
v) 2,750 units

2) You manage bond portfolios and are setting up a new portfolio with a “planning horizon” of three years. So you wish to set the duration of this portfolio to a 3-year horizon.

Portfolio is to be formed by using 2 bonds with durations longer than 3-year planning horizon. You are long one bond and short on other. One bond has duration of 7 years. The other bond has duration of nine years.

Solve, algebraically, for weights which you will need to hold in two bonds to set duration of portfolio to the wanted 3 years.