adms_3530_assignment_1_fall_2012_solution

18 1 1 1 1000 018 12 1 0195618171 the effective

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Unformatted text preview: ase 10 1 1 1 2.5% 10 6 1 0.025 0 1 0.025 1.025 ?? 55.08125362 Second Phase 20 1 1 1 1 2.5% 20 6 1 0.025 0 1 0.025 1.025 110.1625072 1.025 ?? 110.1625072 94.9927847 Third Phase 30 2.5% 8 1 1,00 0 ?? 1 1 1 Page 14 of 18 1 0.025 30 215.104115 1 0.025 1.025 1000 1.025 820.7465708 1035.850686 1035.850686 1.025 1 770.21 The price that should be paid for the bond today is 55.08 94.99 770.21 $920.28 #6b) At the end of year 3, 20 1 4% 4%/2 2% 1 20 1 0.04 0.04/2 6 1 0.02 0.02 0 1 0.02 1.02 ?? 112.0286 Final Phase, 30 2% 0.02 1 8 1 0.02 219.7644432 1 ?? 1 1 30 1000 1 1 0.02 1.02 1000 1.02 853.4903712 1073.254814 1.02 1073.254814 953.0195606 Page 15 of 18 The price at the end of year 3 is 112.03 10 Annualized rate of return = 1.100773678 953.02 6 $1065.05 953.02 920.28 920.28 0.100773678 1 0.03252207...
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This note was uploaded on 03/27/2013 for the course ECON 1000 taught by Professor Paschakis during the Spring '08 term at York University.

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