1. Discuss the advantages and disadvantages of options in the financial markets? 2. Answer the followings: a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%? b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?
1. Discuss the advantages and disadvantages of options in the financial markets? 2. Answer the followings: a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%? b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?
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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1. Discuss the advantages and disadvantages of options in the financial markets?
2. Answer the followings:
a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%?
b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?
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