SI Garrett FIN 300 Exam 2 Review WS - Garret FIN 300 Exam 2 Bonds Stocks and Inflation Review Inflation Practice 1 If the inflation rate is-5 and the

# 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 ReviewInflation Practice1) 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 Practice4) Given the following information, compute the fair market price of this bond:Yield to maturity: 10%Semi-annual Coupon Payment: \$50Face/Par Value: \$1,000Years to Maturity: 305) 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