This preview shows pages 1–2. Sign up to view the full content.
Economics 333  Second Test Math Practice
1. A $10,000 Face Value Coupon Bond with a Coupon Rate of 6% and a 5year maturity has a
coupon payment of:
2. a) A $7,000 Par Value coupon bond with a 6year maturity and an annual coupon payment of
$350 has a coupon rate of:
b) If you purchase this bond at par (for $7,000), what will be the interest rate?
c) If you purchase this bond for $6,000, how would you determine the interest rate (set up but
don't solve)? Is this rate higher or lower than the rate in part b)?
3. A Discount Bond with a Face Value of $2,000 and a 1year maturity has what interest rate
when purchased for $1,600?
4. A Discount bond with a Face Value of $960 and maturing in 6 years has what interest rate
when purchased for $600? (use simple method)
5. What is the Value in 2 years of $1000 lent today at an interest rate of 5%?
6. a) How much would you be willing to pay today for (what is the present value of) a certificate
bearing the right to receive $100 1 year from today if the current interest rate is 11%?
b) If the current interest rate changes to 15%, does the present value of the certificate go up or
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.
This note was uploaded on 04/07/2008 for the course ECON 333 taught by Professor D.bowes during the Spring '08 term at S.E. Louisiana.
 Spring '08
 D.Bowes
 Economics

Click to edit the document details