5) Consider two bonds. The first is a 2n year bond with price $2,250, has annual coupons with theratio of the effective annual coupond rate to the effective annual yield rate r/i = 1.04, and the presentvalue of the redemption value is $500.The second one is a n year zero coupon bond with the same redemption value and effective annualyield rate as the first bond and price of $1,000. Find the par value of the first bond.

To find the par value of the first bond, we can use the formula for the present value of a bond,…

Answered: 5) Consider two bonds. The first is a…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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A family friend owns a private comany and wants to raise some cash. The company is not yet public so your friend wants to structure a 3 -year debt instrument that looks like a bond that can be sold. The deal is for each one of these that you buy today for $975, you will recieve every quarter a $110 payment. And at the end of the three years (after getting all those payments) you will get a final of $1,100 payment. What is the yield to maturity after this investment? please show work in excel.
5. The price of a house is 400000. Then, you make a down payment of 130000 and take a 30-year mortgage at 4% per annum for the balance. How much will be your monthly payment?
Sydney is saving for a down payment on a new home. Each month she deposits $150 into an accountyielding 4.5% APR. If she does this for 10 years, how much will she have saved for the down payment?
5. What is the time period of a P10,000 loan at 6.75% simple interest, in which the total amount of interest paid was P618.75?
2. Suppose that you take an add-on loan for $24,000 at an annual rate interest of 5.45% to be repaid in semi-annual (six-month) installments over two years. How much will semi-annual payments be? Use the close-end method.
D5) The annual term structure of interest is (6%, 6.3%, 6.7%, 7%, ... ) and the 3-year deferred 2-year forward rate is 7.8%. Find the par yield for a 5-year bond.
The debtor wants to pay off a debt due from three amounts: 1000 riyals, 1500 riyals and 2000 riyals, on dates separated from today by 30, 35 and 40 days, in one batch after 38 days. What is the basic value of the payment, given that the rate used is 10%?
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 6.8 percent, has a YTM of 6.2 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6.2 percent, has a YTM of 6.8 percent, and also has 13 years to maturity. The bonds have a par value of $1, 000. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 3 years? In 8 years? In 12 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity. Do this without using excel, showing all work.
Ian won the lottery; however, the lottery company gave her the following two options to receive her prize money: ● Option (a): $8,000 in four months and $18,000 in nine months. • Option (b): $3,000 immediately and $24,000 in twelve months. Assume that money earns 4.75% p.a. simple interest and use today as the focal date. a. What was the equivalent value of the payments under option (a) at the focal date? Round to the nearest cent b. What was the equivalent value of the payments under option (b) at the focal date? Round to the nearest cent c. Which option would be economically better for Ian and by how much? O a. Option (a) O b. Option (b) is better by Round to the nearest cent SAVE PROG
A merchant bought goods worth 8,000 riyals, paid half the price in cash, and agreed to pay the rest at the end of 6 months, and the seller deducted the bill once received and found that the trade discount is 1.08 of the correct discount. If you know that discount rate equals interest rate, Calculate the following: I) Interest rate. II) The basic value of the bill.
17) Determine the simple Interest Rate applied to a Principle of $100,250 over 10 years if the total interest paid equals the Principal.
1. Say for instance you buy a house for 250,000. Then, you make a down payment of 15% of the purchase price and take a 30-year mortgage at 6% per annum for the balance. How much will he be paying every month? (Round to the nearest hundred, example, for 2435, your answer will be 2400, do not include the value of cents.)

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