ACST201 selection of questions 2011 paper

ACST201 selection of questions 2011 paper - Selection of...

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© 2011 (All rights reserved) Department of Applied Finance and Actuarial Studies, Macquarie University 1 Selection of questions from 2011 Final Exam paper. Question One (2+2+2+1+2+1+2+2+2+2 = 18 marks) (a) Ben buys a 180-day \$100,000 bank bill, 30 days after issue, for a price of \$98,140.70 (the purchase yield is 4.61%). After holding the bill for 30 days Ben sells it at a yield of 4.56% pa (simple interest). (i) Find the sale price. (2 marks) (ii) Find Ben’s simple interest yield pa (as a percentage, rounded to 2 decimal places) over the 30-day holding period. (2 marks) (iii) Explain how Ben’ s yield calculated in (ii) would change (increase or decrease) if the sale yield was less than 4.56%. Why would the yield change in this way? (2 marks) (iv) When a bank bill is purchased and sold before maturity the dollar return consists of two components a capital component and an interest component. State how to calculate the capital component. (1 mark) (v) Explain in your own words and with reference to the purchase yield and the

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