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

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ACTSC 231 Solutions to Quiz 9 pink 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 : 92 n 2 = 2 (3) = 6 , j 2 = 3 : 5% 2 = 1 : 75% P 2 = 200 a 6 j 1 : 75% + 5000(1 : 0175) 6 = 5635 : 51 NPV 6284 : 92 + 200 a 9 j j + 5635 : 51(1 + j ) 9 = 0 = >j = i (2) 2 = 2 : 128436% = ) i (2) = 4 : 26% 2. C = F = 1000 , j = 1 : 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 & 1500 r ) a n j = 1000 & 500 ra n j (4) Sub (3) into (4) = > P = 1000 & 500 P 2000 = > P = 800 1...
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This note was uploaded on 04/07/2010 for the course ACTSC 231 taught by Professor Chisholm during the Winter '09 term at Waterloo.

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