ECO 3311-Handout #3: Some Useful Questions & Answers and a Complement to Chapters 5 &
Recall that the rate of return is given as: R =
C Pt +1 Pt 100 500 1000
= 0.4 or 40%
Review Sheet for Midterm Exam #1
Date of Exam
The first midterm exam will be held in class on Tuesday, October 11.
I will have additional office hours for the exam next week on Monday, October 10 from
Handout # 1: Some useful formula ideas used to calculate the fixed and coupon payments
(applicable to fixed payment loans and coupon bonds)
Formula for the sum of geometric series
is given by
Multiplying both sides by gives
And subtracting (2) fro
Handout #2: Using Quadratic Equation Formula to solve for yield to maturity of a coupon bond
that matures in two years.
Remember, a quadratic equation is of the form: ax 2 + bx + c = 0
Where a and b are coefficients and c is any constant.
To solve for x,