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Complete Solutions Assignment 3

# Complete Solutions Assignment 3 - = \$1000/\$5000= 20 The...

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Solutions Assignment 3 Q1. ; the answer is A Q2 ; the answer is A Q3 ; equation is true only if i=0.10; the answer is C Q4. (\$1000)(1+0.1) 2 = \$1,210; the answer is: B Q5. i =F/P = 1/20 = 0.05 or 5%; the answer is C Q6. The highest yield to maturity will be on the bond that pays the highest coupon rate with the lowest price. The answer is A. Q7. Buy low and sell high. The answer is D. Q8. YTM is the interest rate that equates the price with the present discounted value of the income stream. i= i= 5.3% . The answer is B. Q9. Current yield is ic=C/P
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Unformatted text preview: = \$1000/\$5000= 20%. The answer is C Q10. If a similar security sold today pays \$110 in one year then the interest rate is 10%. Choose between \$500 today or \$665.50/(1.1)^3 = \$500 The answer is B. Q11. ; the answer is C. Q12. ; the answer is B Q13. i db = = 22.22%; The answer is A. Q14. ; the answer is C Q15. Initial price = . Price in one year is : Rate of capital gain is: Capital gain = (P t+1- P t ) / P t – Capital gain = (P t+1- P t ) / P t = (683.0135-401.8776)/401.8776=69.95%. The answer is D....
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