# HW7 - University of Illinois at Urbana-Champaign Department...

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University of Illinois at Urbana-Champaign Department of Mathematics—Actuarial Science Program Math 210 Instructor Jared Thompson Theory of Interest Spring 2006 Homework Assignment #7 (10 points) Due at the beginning of class on Wednesday, April 19, 2006 Please use rounding as little as possible, especially when using interest rates. You may find your calculator’s memory button(s) to be helpful. You are encouraged to work in small groups on these problems, but each student must turn in his or her own answer sheet. Show all work—enough to show that you understand how to do the problem—and circle your final answer. Full credit can only be given where answers and approach are appropriate. Please give answers to two decimal places, e.g. xx.xx% and \$xx,xxx.xx . 1) A 15-year bond with 10% semiannual coupons has a face (and redemption) value of \$1,000. Find the price of the bond, assuming an annual effective interest rate of 10%. 2) At the end of the semester, you decide forego a ritualistic burning of actuarial textbooks.

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HW7 - University of Illinois at Urbana-Champaign Department...

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