www.sfu.ca/-bick/bus316/RETO9-RET 10.Pr.pdf www.sfu.cal-bick/bus316/interes Prob
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www.sfu.ca/-bick/bus316/RETO9-RET 10.Pr.pdf www.sfu.cal-bick/bus316/interes Problem RET-9 Suppose you invest$500,000 For a period of The interest rate is r - Compute the maturity value of the loan (be exact to within $.01) under each one of the following assumptions: (a) r is a simple rate per 360 days. (b) r is a simple rate per 365 days (c) r is a daily-compounded rate (using a 365 day year). (d) r is a continuously-compounded rate (using a 365 day year). (e) r is an effective annual rate (using a 365 day year). 175 days 0.05 5.00% .. (This is completed for you.) value 512.152.78 There is no need to show work Problem RET-10 A zero coupon bond matures in The maturity value is $1,000,000 Its current price is This means: FV($1)1.0289929 over the period. Part I Find the annualized interest rate, under each one of the compounding methods (a)-(e) as in Problem RET-9. Method (a) is completed for you Be exact to within .000001, namely .0001%. 160 days. $971,824 Answer here part II (below) Using r on the left, FV($1) for 100 days is Method 5234 1.018121 1+100/360 There is no need to show work Part II. (Complete the above table on the right.) For each one of the above methods, using the annualized interest rate computed in part 1, compute FV($1) over a different period, of 100 days (instead of 160 days). Again be exact to within .000001. Method (a) is computed for you.Explanation / Answer
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PART I
PART II
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Method r = Formula Used a 0.065234 =((1000000/971824)-1)*360/160 b 0.066140 =((1000000/971824)-1)*365/160 c 0.065205 =(((1000000/971824)^(1/160)-1)*365) d 0.065199 =LN(1000000/971824)/160*365 e 0.067372 =((1000000/971824)^(365/160))-1Related Questions
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