In-class problems solutions 1-3

15 computecapitalgl p5p09201510007985capitalloss

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Unformatted text preview: mpute total interest (the coupon payments): Total interest = 5 x (0.06 x \$1000) = 5 x \$60 = \$300 Compute interest on interest: N = 5 I/Y = 8 PV = 0 PMT = 60 CPT FV = ‐352.00 Interest‐on‐interest is equal to \$351.00 ‐ \$300.00 = \$52.00 Compute the price at the end of year 5 first: N = 10 – 5 = 5 I/Y = 8 PMT = 60 (assume 1000 FV – this is arbitrary) FV = 1000 CPT PV = ‐920.15 The price at the end of year 5 is P5 = \$920.15 Compute Capital G/L: P5 – P0 = \$920.15 ‐ \$1,000 = ‐\$79.85 (capital loss) Compute total income: Total Income = Total Interest + Interest‐on‐Interest + Capital G/L = = \$300.00 + \$52.00 ‐\$79.85 = \$272.15 Compute realized yield: LECTURE NOTES #3...
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This document was uploaded on 03/30/2014.

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