MA373 S11 Test 3-1

MA373 S11 Test 3-1 - Math 373 Test 3 April 5 2011...

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Math 373 Test 3 April 5, 2011 Instructions DO NOT OPEN THE TEST UNTIL TOLD TO DO SO. If you want full credit for those correct or Partial Credit for those that are wrong You must show your work. You may only use the approved calculators. Use of other calculators will result in you receiving a zero on this test. If you have a question, raise your hand and I will come and see you. GOOD LUCK!
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Math 373 Test 3 April 5, 2011 1. The preferred stock of Zhao Corporation was sold today for a price of 182. The preferred stock pays a level quarterly dividend of D. The next dividend is payable tomorrow. The stock was sold to yield 16% compounded quarterly. Calculate D.
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2. Calculate the Macaulay convexity for a 4 year bond which matures for 100,000 and has annual coupons of 5,000. The annual effective interest rate is 6.5%.
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3. Amstutz Banking Corporation has issued a certificate of deposit which will pay Hunter a payment of one million at the end of 7 years. Amstutz fully immunizes this payment using a 5 year zero coupon bond and a 10 year zero coupon bond.
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