1) Five years ago, you borrowed $250,000 for a ten-year period at a fixed interest rate of 9% p.a. with interest compounded on an annual basis. You have been making regular annual payments on your loan and you now wish to repay in full the amount outstanding on this loan. The total amount you need to repay is closest to: Group of answer choices $151,521. $168,850. $194,775. $217,051.
1) Five years ago, you borrowed $250,000 for a ten-year period at a fixed interest rate of 9% p.a. with interest compounded on an annual basis. You have been making regular annual payments on your loan and you now wish to repay in full the amount outstanding on this loan. The total amount you need to repay is closest to: Group of answer choices $151,521. $168,850. $194,775. $217,051.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Please answer all 5 question if possible, thanks.
Transcribed Image Text:1)
Five years ago, you borrowed $250,000 for a ten-year period at a fixed interest rate
of 9% p.a. with interest compounded on an annual basis. You have been making
regular annual payments on your loan and you now wish to repay in full the amount
outstanding on this loan. The total amount you need to repay is closest to:
Group of answer choices
$151,521.
$168,850.
$194,775.
$217,051.
2)
Which of the following statements are most likely to be true?
The only factor that has an impact on a bond's price is its yield to
maturity.
Bond prices and market interest rates move in the opposite direction.
As time passes and a bond approaches its maturity date, its (ex-coupon)
price will converge to its face value.
I.
I.
4)
Group of answer choices
I and Il only.
I and III only.
Il and III only.
I, Il and III.
Ninety days ago, you purchased a 180-day Treasury bill with a face value of
$100,000. At that time, the yield to maturity on the bill was 4.0% p.a. The current
yield to maturity on the bill is 5.0% p.a. The price of the bill today is closest to:
Group of answer choices
$97,594.
$98,066.
$98,782.
$99,023.
3)
A company has a bank loan outstanding that requires it to make annual payments
of $1,000,000 at the end of each of the next three years. The bank has offered to
the company to skip the next two payments and instead make a single payment at
the end of the loan's term in three years' time. If the interest rate on the loan is 6%
p.a., compounded quarterly, the final payment that will make the
company indifferent between the two payment options is closest to:
Group of answer choices
$2,666,283.
$2,673,012.
$3,183,600.
$3,187,856.
5)
The bonds of a company have a face value of $1,000, pay an annual coupon of 8%,
and have 6 years remaining to maturity. If the market price of these bonds today is
$1,033 their yield to maturity is closest to:
Group of answer choices
7.1%.
7.3%.
8.3%.
8.5%.
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