HW1 - 220:301:08 Money and Banking Department of Economics...

This preview shows pages 1–2. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 220:301:08 Money and Banking Department of Economics Homework #1 Fall 2010 Rutgers University Part I • Ch. 4 – p. 38 Exercises 1, 2, 5, 6, 10 – p. 39 Exercises 1, 2 – p. 43 Exercises 1, 3 – p. 45 Exercises 1, 3 • Ch. 5 – p. 57 Exercises 1, 5, 7 – p. 60 Exercises 1, 3, 4, 5 • Ch. 6 – p. 69 Exercises 1, 2, 4 • Handout H2 BartervMoney.pdf – Questions 1-4 Part II Problem 1) In class we learned that current yield is ˆ i = C Pv . We also know that there are cases when current yield is not the same as yield to maturity. For an annuity that stops payment after T years, we found the relationship between current yield and yield to maturity to be ˆ i = i [ 1- (1 + i )- T ]- 1 when we compound annually. This means that current yield always overestimates the yield to maturity of any terminating stream of income. Let’s now consider the case where the asset pays an annual coupon, C , but has a par value, M , where M is a lump-sum amount to be received at the asset’s maturity. That is, after T years, the asset pays M in addition to the final coupon payment.in addition to the final coupon payment....
View Full Document

{[ snackBarMessage ]}

Page1 / 2

HW1 - 220:301:08 Money and Banking Department of Economics...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online