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HW2_Financial_Mathematics_-_Part_2_Solution_Manual

# HW2_Financial_Mathematics_-_Part_2_Solution_Manual -...

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SILABO – GERENCIA EMPRESARIAL Universidad Iberoamericana UNIBE Due Date : February 12 2011 Deliver hard copy at the beginning of class. Note: In all the problems set, even though those who involve multiple choices questions, the student must provide a clear mathematical argument for the response. Otherwise a partial credit will be given for correct answers. HOMEWORK 2: Solution Manual Exercise 2.1 8. D = MdT D = (\$1,000)(0.03)(5) D = \$150 The proceeds are found by subtracting discount from the maturity value: \$1,000 - \$150 = \$850 22. June 28 is day 151+28 = 179; December 31 is day 365. The term is therefore 365 – 179 = 186. Page  1  of  7 FINANCIAL MATHEMATICS HOMEWORK 2: PART 2

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D = MdT D = (\$1,000)(0.0589)(186/365) D = \$30.01 30. The amount of the discount is \$150,000 - \$117,300 = \$32,700 D = MdT \$32,700 = \$150,000(d)(9/12) 32,700 = 112,500 d Divide both sides by 112,500 d = 29.07% Note that this rate is based on an assumed remaining life expectancy. Because the insured’s actual time left can not be known for certain, the actual simple discount rate cannot be known in advance.
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HW2_Financial_Mathematics_-_Part_2_Solution_Manual -...

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