Assignment 2

Assignment 2 - FINA 127 Assignment #2: Instructions: Please...

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FINA 127 Assignment #2: Instructions: Please type your responses and upload them via the link in Blackboard no later than 11:59 PM Monday 2/22/10. This assignment consists of quantitative and qualitative questions. Please show any relevant interim steps in order to receive partial credit. Note, your interim steps can consist of the financial calculator key strokes that you entered to arrive at your solution. Lastly, I am familiar with many of the online information sources and I have access to all of the same sources that you do. In short, please adhere to GW’s Code of Academic Conduct. Although it should not be necessary, if you feel the need to seek an outside source, be sure to document it properly. PLAGIARISM WILL NOT BE TOLERATED! Questions: 1. A bond is issued with a $10,000,000 face value that promises a 6% coupon paid semi-annually for 10-years. The current market yield for equivalent bonds with the same time to maturity and credit rating is 5%. What is the price of the bond? (Remember, interest rates are typically quoted on an annual basis!!!) Years : 10 FV : 10,000,000 Coupon : 12% Interest: 5% Price : $15,405,214
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2. The pricing of life insurance contracts relies extensively on estimating the average life expectancy of various groups of people. Although it is difficult to predict the number of years a person will live, it is relatively easy to predict the number of years that groups of people will
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Assignment 2 - FINA 127 Assignment #2: Instructions: Please...

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