Solution for Assignment 3
Question 1
In six month the money market account will become e0.5r = e0.015 , the probability the stock
will have a higher return than the money market account is
S0.5
S0 e0.
25-year
amortizat
Base
ion
Interest rate
2.50%
Scenario:
1 year discount factor
Annuity factor (a(n)
Initial Mort
1000000
annual payment (K)
Year
Interest p PrincipalR Outstanding Balance
0
1,000,000
ACT240 Lecture 10
Excel Homework
Given initial mortgage amount, interest rate, amortization period, find the following
in Excel:
1) Show the amortization schedule of the 30-year mortgage.
2) Do I pay
ACT240 Lec 10
November 28, 2016
10:10 AM
You want to purchase a $1000 par bond. The annual coupon rate
is 13%. The maturity date is 11 years from the time of purchase.
You can purchase the bond today
ACT240 Term Test 1
Fall 2016 October 14, 2016 10:05-11am
Note:
1. Please write your last and first name as appeared in ROSI, as well as your student number on the
exam booklet.
2. Please write down th
ACT240 Lec 3
September 26, 2016
10:04 AM
ACT240 Lec 3 Page 1
ACT240 Lec 3 Page 2
ACT240 Lec 3 Page 3
ACT240 Lec 3 Page 4
Generic Case of Force of Interest (as a function of t):
ACT240 Lec 3 Page 5
Gen
ACT240 Lecture 6
Continuous Annuity
A 5-year continuous annuity has the following payment schedule:
$1 per year in the first year, $2 per year in the 2nd year, $3 per year in
the 3rd year, $2 per year
ACT240 Lecture 5
Very crucial take-aways:
ONLY two things matter when it comes to calculating PV or AV for annuity immediate or
annuity due:
(1) number of cashflow
(2) The position you stand on the ti
Socially-beneficial Bond
The Project Overview:
In this project, you will work in small teams of three to research a real-life bond or bondlike instrument that is designed to maximize social and/or env
Lecture 2
September 7, 2016
4:30 PM
Lecture 2 Page 1
Effective interest rate for a holding period [t1, t2]:
[A(t2) - A(t1)] / A(t1), holding period can be any length.
Lecture 2 Page 2
Lecture 2 Page 3
ACT240 Lec 8
November 14, 2016
10:07 AM
You took out a mortgage of $100,000 to repaid with annual
payments at the end of each year for 30 years. Each of the
first 29 payments is equal to two times the
ACT240 Lecture 7
Why do we study annuities with
payments following an arithmetic
progression?
Sussie invests $2000 at the start of the year in a fund which credits
interest at an annual effective rate
ACT240 Lecture 8
Common questions on mortgages
How is my monthly mortgage payment calculated?
What am I actually paying for in each payment?
How do I calculate the total amount of interest Ill be p
ACT240 Lecture 4
October 3, 2016
10:05 AM
Inflation
New Section 7 Page 1
Future selling price of the stock)
Two strategies:
1. Hold the stock for 1 year and sell it
2. Hold the stock forever
New Secti
ACT240 Lecture 11
Bond Amortization
Bond 1: A 10-year $100 par bond with 4% annual coupons purchased
at 5% yield.
Bond 2: A 10-year $100 par bond with 5% annual coupons purchased
at 5% yield.
Bond
ACT240 Lec 11
December 5, 2016
10:08 AM
Bond 1: A 10-year $100 par bond with 4% annual coupons
purchased at 5% yield.
Bond 2: A 10-year $100 par bond with 5% annual coupons
purchased at 5% yield.
Bond
ACT240 Lecture 4
Three ways to participate in polling
and earn BONUS POINTS (from week
3)
1- Download the Poll Everywhere app on your phone and vote! - FREE
2- Open any web browser on your phone/table
ACT240 Lecture 9
Classic Sinking Fund Repayment
Scheme
You borrowed $10,000 for 10 years and used a SF method of
repayment. The interest on the loan is 6.5% annual effective, and SF
earns 5% annual ef
ACT240 Lec 6
October 24, 2016
10:08 AM
n-year annuity-immediate that pays m times a year, payment
rate $1
New Section 16 2 Page 1
You want to purchase 100 shares of a zero-growth stocks (i.e.
dividend
ACT240 Math of Credit
and Interest
Lecture 1
Vicki Zhang
Department of Statistical Science
ACT240?!
Three ways to participate in polling
and earn BONUS POINTS (from week
3)
1- Download the Poll Everyw
ACT240 Lecture 5
October 17, 2016
10:05 AM
You plan to retire at the end of 42 years and you are saving for
retirement. You plan to make the following deposits:
1) For the first 14 years, you will mak
Category
Topic/Issues
Excellent
Good
15
12
Socially important, ri Socially important, some
Excel reporting
15
12
Sufficient financial ca Financial calculations are
Discussions
20
16
Stated both financ
ACT240 Lecture 3
Three ways to participate in polling
and earn BONUS POINTS (from week
3)
1- Download the Poll Everywhere app on your phone and vote! - FREE
2- Open any web browser on your phone/table
ACT240 Lec 9
November 21, 2016
10:06 AM
Interest only loan - period payment = interest due
Borrower makes a regular deposit into a separate fund sinking fund
i-interest rate on the loan
j-sinking fund
ACT240 Lec 7
October 31, 2016
10:08 AM
New Section 19 Page 1
New Section 19 Page 2
New Section 19 Page 3
A 5-year annuity has increasing monthly payment at the end
of each month. The first payment is
Final Exam
9 True/False questions; 3 Excel-VBA questions; 10 written
answer questions
Monday December 12, 7pm-9pm; BA1160
Close book exam. Aids allowed: Up to two scientific/business
calculators
Formu