SI Garrett FIN 300 Exam 2 Review WS

SI Garrett FIN 300 Exam 2 Review WS - Garret FIN 300 Exam 2...

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Garret FIN 300 – Exam 2 Bonds, Stocks, and Inflation Review Inflation Practice 1) If the inflation rate is -5% and the real rate of interest is 8%, what is the nominal rate of interest? 2) If the real rate of interest is 10% and the nominal rate of interest is 7%, what is inflation? 3) If the inflation rate is 3% and the nominal rate of interest is 6%, what is the real rate of interest? Bond Practice 4) Given the following information, compute the fair market price of this bond: Yield to maturity: 10% Semi-annual Coupon Payment: $50 Face/Par Value: $1,000 Years to Maturity: 30 5) Let us say you want to invest in a zero-coupon paying bond that has a face-value of $200 after maturing in exactly 8 years from today. What is the yield to maturity if the bond sells today for a price of $150? 6) Given a 20-year zero coupon-paying bond with a face value of $50,000 and yield-to-maturity of 8%, what is a fair market price of such a bond today? 7) Given the following information, compute the fair market price of this bond: Face/par value: $3,000
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