University of Illinois at UrbanaChampaign
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 15year 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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 Spring '08
 Hubscher
 Finance, Actuarial Science, Interest Rates, Zerocoupon bond, annual coupon bond

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