Given that the present value of a payment of £420 due in exactly one year and 3 months' time is £403, calculate the following: a) The monthly force of interest. b) The nominal rate of interest per annum convertible monthly. c) The nominal rate of discount per annum convertible monthly.

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
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Using formulas, no tables, hint: Starting from a monthly t.u.
and using appropriate formulae and notations (particularly for nominal rates). 

Given that the present value of a payment of £420 due in exactly one year and 3
months' time is £403, calculate the following:
a) The monthly force of interest.
b) The nominal rate of interest per annum convertible monthly.
c) The nominal rate of discount per annum convertible monthly.
Transcribed Image Text:Given that the present value of a payment of £420 due in exactly one year and 3 months' time is £403, calculate the following: a) The monthly force of interest. b) The nominal rate of interest per annum convertible monthly. c) The nominal rate of discount per annum convertible monthly.
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