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Examples_L1_Class - 1 If APR on a 3-month deposit is 20...

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1 If APR on a 3-month deposit is 20%, what is EAR? APR 20.0% # Periods 4 5.00% EAR 21.6% 2 If EAR on a 3-month deposit is 25%, what is APR? EAR 25.0% # Periods 4 Period Rate 5.74% APR 22.9% 3 Date Price Returns Purchase 1-May-07 7.25 Period 31.0% Sale 15-Dec-07 9.50 Simple Annual 49.7% Compund Annual 54.1% Days 228 4 Nominal Return 54.1% Inflation 10% ??? Real Return ???? ???? You purchased 100 ABC Inc shares on May. 1, 2007, at 7.25YTL per share and sold them for Dec. 15, 2007. What is your return over the holding period? What is your annualized return (si compounded)? In Example 3, suppose that the inflation in the previous year was 10%. What is your approxim return?
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r 9.5YTL per share on imple and mate annualized real
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1 Calculate future value of $1 for interest rates of 5%, 10%, 15% and for 10 and 30 years 1 10 30 5% ($1.63) 10% 15% 2 Calculate present value of $10,000 for interest rates of 5%, 10%, 15% and for 10 and 20 years 10000 10 20 5% ($6,139.13) 10% 15% 3 Find the interest rate implied by combinations of present and future values. Years $400 11 $684 5.0% 5% 183 4 249 300 7 300 4 Needs 700,000 FV of current value PV of future need in 2 Shortfall in 2 years
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