Suppose you deposited the K 1000 in four payments of K250 each on 1st January of 2009, 2010, 2011 and 2012. How much would you have in your account on 1st January 2012 based on 8 percent annual compounding?

Suppose you deposited the K 1000 in four payments of K250 each on 1st January of 2009, 2010, 2011 and 2012. How much would you have in your account on 1st January 2012 based on 8 percent annual compounding?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

QUESTION 1

A Suppose you deposited the K 1000 in four payments of K250 each on 1st January of 2009, 2010, 2011 and 2012. How much would you have in your account on 1st January 2012 based on 8 percent annual compounding?

B A government bond issued 5 years to maturity, a face value of K 1,000 and a coupon rate of 8% paid annually. Similar bonds have a yield of 8 percent. Suppose after one year the yield rises to 9% and interest is paid semi-annually, what would be the value of the bond

Assume it is now 1st January 2008. On 1st January 2009, you will deposit K 1000 into a savings account that pays 8 percent

If the bank compounds interest annually. How much will you have in your account on 1st January 2012

What would your 1st January 2012 balance be if the bank used quarterly compounding rather than annual compounding?

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Problem ▪ You are considering investing $1,000 in a savings bond that will pay $1,210 in 2 years. What is the interest rate?
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