Prob Set Chap 7 - 100 (PVIFA 8,1) + 1000 (PVIF 8,1) 100...

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Kyle Woods Fin 315 – Stendardi T-R 9:30 Problem Set Bonds – Chap. 7 – 1,3,5,7 1. V = I(PVIFA rd,n) + M(PVIF rd,i) V = 80 (PVIFA 9, 10) + 1000 (PVIF 9,10) V = 80 (6.4177) + 1000 (.4224) = 513.416 + 422.4 = $935.82 3. V = 90/2 (PVIFA 8.5/2, 8*2 ) + 1000(PVIF 8.5/2, 8*2) 45 (PVIFA 4.25, 16) + 1000 (PVIF 4.25, 16) 45 (11.8559) + 1000(.5529) = 533.52 + 552.9 = $1,086.42 5. a) – 15 year 100 (PVIFA 5,15) + 1000 (PVIF 5,15) 100 (10.3794) + 1000 (.4810) = 1037.94 + 481 = $1,518.94 100 (PVIFA 8,15) + 1000 (PVIF 8,15) 100 (8.5595) + 1000 (.3152) = 855.95 + 315.2 = $1,171.15 100 (PVIFA 12,15) + 1000 (PVIF 12,15) 100 (6.8109) + 1000 (.1827) = 681.09 + 182.7 = $863.79 b) 1 year 100 (PVIFA 5,1) + 1000 (PVIF 5,1) 100 (.9524) + 1000 (.9524) = 95.24 + 952.4 = $1,047.64
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Unformatted text preview: 100 (PVIFA 8,1) + 1000 (PVIF 8,1) 100 (.9259) + 1000 (.9529) = 92.59 + 925.9 = $1,018.49 100 (PVIFA 12,1) + 1000 (PVIF 12,1) 100 (.8929) + 1000 (.8929) = 89.29 + 892.9 = $982.19 The longer terms bond price varies more than shorter term bonds when interest rates change because the longer the maturity the longer before it is paid off and the bondholder can replace it with one with a higher coupon. 7. V = 100 (PVIFA 8,10) + 1000 (PVIF 8,10) 100 (6.7101) + 1000 (.4632) = 671.01 + 463.2 = $1,134.21 V = 100 (PVIFA 7,10) + 1000 (PVIF 7,10) 100 (7.0236) + 1000 (.5083) = 702.36 + 508.3 = $1,210.66 Change = 1210.66 – 1134.21/1134.21 = 76.45/1134.21 = .0674 = 6.7%...
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This note was uploaded on 04/28/2008 for the course FIN 315 taught by Professor Stendardi during the Spring '08 term at St. John Fisher College.

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