MBA_HW_01

xlsx

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

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HW1 Professor Anh Le Please enter your ID 992432751 Please enter your name 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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