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Quiz 9 B

# Quiz 9 B - > P 2 = 1000 ra n j(1 P = 1000 ra n j 1000 ra...

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ACTSC 231 Solutions to Quiz 9 blue 1. C = F = 5000 , r = 8% 2 = 4% , Fr = 200 ; n 1 = 2 (7 : 5) = 15 , j 1 = 4% 2 = 2% P 1 = 200 a 15 j 2% + 5000(1 : 02) 15 = 6284 : 93 n 2 = 2 (4) = 8 , j 2 = 3 : 5% 2 = 1 : 75% P 2 = 200 a 8 j 1 : 75% + 5000(1 : 0175) 8 = 5833 : 07 NPV 6284 : 93 + 200 a 7 j j + 5833 : 07(1 + j ) 7 = 0 = >j = i (2) 2 = 2 : 22159% = ) i (2) = 4 : 44% 2. C = F = 1000 , j = 0 : 5 r PV of coupons = PV of the redemption 1000 ra n j = 1000 v n (1) Basic price formula: P = Fra n j + Cv n P = 1000 ra n j + 1000 v n (2) sub (1) into (2) =
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Unformatted text preview: > P 2 = 1000 ra n j (1) P = 1000 ra n j + 1000 ra n j = > ra n j = P 2000 (3) Premium/Discount price formula: P = C + ( Fr & Cj ) a n j = 1000 + (1000 r & 500 r ) a n j = 1000 + 500 ra n j (4) Sub (3) into (4) = > P = 1000 + 500 P 2000 = > P = 1333 : 33 1...
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