CHE374F-PS01 Sol-2009 - CHE374F – PS #1 Solution – 2009...

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Unformatted text preview: CHE374F – PS #1 Solution – 2009 Question #1: Part a: 1 Part b: 1 Part c: 1 Part d: 1 .045 1 1 1 .045 .045 .045 4.40% 59625.93 4.45% 4.41% 4.40% Money owed: (1+. 045 50,000 Question #2: Part a: 1 Part b: 1 Part c: 1 Part d: .% .% 1 1 1 4.55% Money owed: (1+. 0455 50,000 4.59% Money owed: (1+. 0459 50,000 4.60% Money owed: (1+. 046 50,000 4.60% Money owed: (1+. 046 50,000 59740.13 59831.61 59854.49 59854.49 .% .% 1 Question #3: Part a: (1+ Part b: = . Part c: = . Part d: Ten months: ) = . 2.02% . . =100. =100. = $ 99.17 = $ 98.35 . . . . =100. = $ 99.38 (+.21% change) = $ 98.75 (+.41% change) =100. . . Question #4: (99.63) ./ 100 =1.48% . % 1 1.49% (99.22) (98.49) (97.94) ./ ./ . / 100 100 100 =1.879% =2.029% =2.078% . . . % % % 1 1 1 1.897% 2.05% 2.100% Use linear interpolation for T‐bill maturing in 10 months: . % . % 1 2.067% Six months risk free rate three months from now: 1 2.05% / = 1 1.49% / .1 / 2.329% 2.500% 2.000% Interest 1.500% Annual Effective Interest 1.000% Continuous 0.500% 0.000% 0 2 4 6 8 Maturity (months) 10 12 14 ...
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