Bank Regulation2

Bank Regulation2 - Economics 333 Second Test Math Practice 1 A $10,000 Face Value Coupon Bond with a Coupon Rate of 6 and a 5-year maturity has a

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Economics 333 - Second Test Math Practice 1. A $10,000 Face Value Coupon Bond with a Coupon Rate of 6% and a 5-year maturity has a coupon payment of: 2. a) A $7,000 Par Value coupon bond with a 6-year 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 1-year 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
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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.

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Bank Regulation2 - Economics 333 Second Test Math Practice 1 A $10,000 Face Value Coupon Bond with a Coupon Rate of 6 and a 5-year maturity has a

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