HW1_Financial_Mathematics_-_Solution_Manual

HW1_Financial_Mathematics_-_Solution_Manual - FINANCIAL...

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SILABO – GERENCIA EMPRESARIAL Universidad Iberoamericana UNIBE Due Date : February 08 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 1: Solution Manual I. Solve the following linear equations problem set, as they are or in their reduced form: a) b) c) Page 1 of 10 FINANCIAL MATHEMATICS HOMEWORK 1
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d) e) II. Complete the following sentences by filling in the blanks: A printing press, oil drill and electric generating plant are examples of real assets investments. Stocks, bonds and money markets are examples financial assets of investments. The amount that the borrower owes the lender at any time is called the outstanding principal amount or outstanding balance . The interest payment period is the frequency at which the borrower pays interest to the lender. Another term for interest rate is rate of return . III. Assume on January 1, 2006 you opened a savings account with a local bank and between January 1, 2006 and January 1, 2011 you made the following deposits and withdrawals and the bank credited your account with the following interest payments: Use these financial transactions to answer problems b and c. b.) Who is the lender and who is the borrower? You are the lender and the bank is the borrower. Page 2 of 10
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c.) How many financial transactions are there and what are they? There are ten financial transactions and they are: (1) a $5,000 deposit by you on January 1, 2006; (2) a $5,000 deposit by you on January 1, 2007; (3) a $250 interest payment by bank on January 1, 2007; (4) a $5,000 deposit by you on January 1, 2008; (5) a $500 interest payment by bank on January 1, 2008; (6) a $5,000 deposit by you on January 1, 2009; (7) a $750 interest payment by bank on January 1, 2009; (8) a $10,000 withdrawal by you on July 1, 2010; (9) a $1,000 interest payment by bank on January 1, 2010; and (10) a $500 interest payment by bank on January 1, 2011.
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HW1_Financial_Mathematics_-_Solution_Manual - FINANCIAL...

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