MBA_HW_01
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School
Pennsylvania State University *
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30
Subject
Finance
Date
Apr 3, 2024
Type
xlsx
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2
Uploaded by BrigadierFishMaster1495
HW1
Professor Anh Le
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992432751
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DIANA TALLEDO
Question 1
Compute the value of a 5-year 5.06% p.a. coupon bond that pays interest annually assuming
that the appropriate discount rate is 5.43% p.a. (annual compounding) and its face value = $100
Enter your answer here:
98.41695721 CORRECT
Question 2:
A 3-yr T-note with a face value of $1000 and a coupon rate of 6.4% p.a. is trading at par.
The amount of each coupon from this note is:
Enter your answer here:
32
CORRECT
If you hold the above T-note for 2 months and then sell it at a yield of 5% p.a., the dirty price is:
Enter your answer here:
1,047.14
CORRECT
and the clean price is:
Enter your answer here:
1,036.47
CORRECT
Question 3:
Calculate the price of a 135-day T-bill with a face value of 10,000 and a discount rate of 5.86% p.a.
Enter your answer here:
9780.25
CORRECT
Question 4:
The price of a perpetuity with monthly cash flows of $50 when the current interest rate is 9.76% p.a. compounding monthly and the first cash flow occurs at the end of month #2 is:
Enter your answer here:
6097.944369 CORRECT
Question A:
To pay for your annual car insurance, you are given two choices:
A) $200 every month for 12 months
B) $1100 now and another $1100 in six months
If the current interest rate is 7.72% p.a. compounding monthly, which option is most optimal?
Question B:
If the discount rate on a 4-week T-bill is 7.14%, what is the corresponding semi-annual APR?
Question C:
Explain how by using just a bank account that earns interest at a rate of 6% p.a.
compounding monthly, you can generate a perpetuity of $71 every two months. How much money do you need?
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