ct010t05 - UNSW ACTL1001 Actuarial Studies and Commerce...

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UNSW ACTL1001 Actuarial Studies and Commerce Tutorial Exercises 5 Exercise 1 Determine the continuous compounding p.a. interest rate equiv- alent to: 1. 6% p.a. effective, 2. 6% p.a. (semi-annual compounding), 3. 0.5% per month effective. Comment on any differences in your answers. Exercise 2 Suppose the continuous compounding rate of interest is 0 . 09 + 0 . 05 t . Find the accumulated value after 5 years (from the time of payment) of: 1. $ 100 made at time 0. 2. $ 100 made at time 2. Exercise 3 Consider a one day loan of $ 100,000,000 made at an interest rate of 10% p.a. (daily compounding) 1. Find the interest payable for this one day loan. 2. Suppose the interest was quoted as 10%p.a. (continuous compound- ing) instead. Calculate the interest payable for the one day loan, and comment on your answer. Exercise 4 Consider a life annuity for an individual aged 40, which pays $ 1 at the beginning of every year if the policyholder is alive. The total number of payments is limited to a maximum of 10. Find the value of this annuity
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This note was uploaded on 06/12/2011 for the course ASB 1001,2522, taught by Professor Nicole during the One '09 term at University of New South Wales.

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ct010t05 - UNSW ACTL1001 Actuarial Studies and Commerce...

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