HW2_Financial_Mathematics_-_Part_2_Solution_Manual

HW2_Financial_Mathematics_-_Part_2_Solution_Manual - SILABO...

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Unformatted text preview: 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 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 insureds actual time left can not be known for certain, the actual simple discount rate cannot be known in advance. Exercise 2.2 6. The amount of interest/amount of discount is $70,000 - $62,500 = $7,500. a) I = PRT $7,500 = $62,500(R)(9/12) 7,500 = 46,875 R R = 16.00% b) D = MdT $7,500 = $70,000(d)(9/12) 7,500 = 52,500 d d = 14.29% 8. The amount of interest/amount of discount is $725,000 - $576,300 = $148,700 a) I = PRT Page 2 of 7 $148,700 = $576,300(R)(2)...
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This note was uploaded on 06/22/2011 for the course ALL 105 taught by Professor Laus during the Spring '11 term at FIU.

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HW2_Financial_Mathematics_-_Part_2_Solution_Manual - SILABO...

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