MA373 S10 Quiz 5 Solutions

# MA373 S10 Quiz 5 Solutions - QUIZ 5 Math 373 Spring 2010 1....

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: QUIZ 5 Math 373 Spring 2010 1. Chupp Corporation pays a quarterly dividend of 10 later today. Future dividends are expected to increase at a rate of 2% per quarter. ' ‘ Calculate the price of Chupp Stock (prior to the payment of the dividend today) in order to yield 12% compounded quarterly. ‘ (Ll new? . 3.7 .9 5 me—wm g .lz- )——\—~\—+—r——-———- 7-,05 Ngxr Tm’“ [:‘(j'é V -—-O _ 5 71am WK M“— _ LIF=/050 // ' £3: far-1 2. You are given the following spot interest rates: a. Calculate the yield rate on a 3 year bond maturing for 1200 with annual coupons of 50 assuming it is priced using these spot interest rates. View :J/‘z’ CW ‘5’” 4,924% b. Calculate f[1.o'2.5] . V221; __ 35/2, HI (Hqu ; 0+(‘3( HOCDyQB L 2‘2. . 7’3...— : /' 47 (l pills) ) ; [/.0;©[/+ ghayyjj ’2 guy/,3 j 92‘ ’D 3. An insurance company is obligated to pay a two year increasing annuity. The annuity pays 100,000 at the end of one year and 150,000 at the end of two years. Amanda wants to exactly match the cash flows from this annuity using the following two bonds: a. Bond A is a one year bond maturing for 1000 with annual coupon rate of7.5% b. Bond B is a two year bond maturing for 1500 with an annual coupon of\$100. Calculate the amount of each bond that Amanda should purchase. an n dawn" "’ / a 75: W; 9376 ‘° )@00 - ﬁ i, loo boo-“(Gaga 3’ gq‘3023 a M’ A r 7! ...
View Full Document

## MA373 S10 Quiz 5 Solutions - QUIZ 5 Math 373 Spring 2010 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online