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File Edit View History Bookmarks Window Help lack board Learn x cnovako4@mail roosevelt x y FIN 311 ple First Qu x j h nstructions for TI-83 sites roosevelt.edu/dswanton/principles-of-finance/fin-311-sample-second-quiz/ SAMPLE FIRST QUIZ numerical answers Do all the problems. Include calculations and/or explanations in your answers wherever appropriate. More credit will be given for correct reasoning than for correct arithmetic. 1. I buy a zero-coupon bond with a face value of $10,ooo and a maturity of 20 years. (a) If I want to make 8% on my money, how much should I pay for the bond? $2,145.48 (b) If I pay $6,139.13 for the bond and hold it until it matures, what rate of return will I have made? 2.47

Explanation / Answer

1. The price would be equal to the present value of face value of bond

=10000/(1+8%)^20

=$2145.48

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2. Let the rate x%

=>6139.13 = 10000/(1+x%)^20

=>x = 2.47%

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