MATH 2K03, Solution Assignment 4
Exercise 1: For the zero-coupon bond with a semi-annual yield rate j , we have
20
5, 083.49 = 10, 000j
Solving for j gives us j = 3.44%. For the coupon bond, sold at price X , we have
20
X = 10, 000vj + 500a20j = 12, 229.
Lecture 4
0
Math 2FM3, Fall 2016, Lecture 4
1.5 Eective and Nominal Rates of Discount
So far, all interest amounts were paid or charged at the end of the
compounding period. Interest payable in arrears is the standard
way.
However, in some transactions
Lecture 1
0
Math 2FM3 Fall 2016 Lecture 1
Ch. 1. Interest Rate Measurements
A component that is common to virtually all financial transaction is
interest, the time value of money.
Interest refers to the rent paid by a borrower of money to a lender
of mo
Lecture 5
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Math 2FM3, Fall 2016, Lecture 5
1.6 The Force of Interest
Let us again consider a continuous-time framework, i.e. financial
transaction take place in a continuum of time.
Let A(t) denote again the accumulated value of an investment at
1
time
Lecture 6
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Math 2FM3, Fall 2016, Lecture 6
1.7 Inflation and The Real Rate of Interest
Inflation is the rise in the general level of prices of goods and
services. It is a central indicator for a countrys economy.
The real rate of interest takes inflati
MATH 2k03
Assignment Two
This assignment is due in the MATH 2K03 locker in the basement of Hamilton Hall by
11:59am (noon) on Monday October 17th, 2011.
Exercises TO BE HANDED IN:
Part 1: Brovermans 5th edition textbook problems: 2.1.18, 2.1.28, 2.2.11, 2
MATH 2K03, Fall 2011, Solutions Assignment Three
3.1.2 (3.1.6) 60 monthly payments. We will use the prospective form; the nal 20
payments are
1000(.98)40 , 1000(.98)41 , , 1000(.98)59 ;
thus
OB40 = 1000(.98)40 + 1000(.98)41 2 + + 1000(.98)59 20
= 1000(.98
MATH 2K03, Fall 2011, Solutions Assignment 2
2.1.18 (2.1.16) Under Option 1 a single deposit is earning interest compounded annually and the accumulated value at then end of 24 years is 10, 000(1 + i)24 .
Under option 2, the 10,000 is the present value of
MATH 2k03
Assignment Three
This assignment is due in the MATH 2K03 locker in the basement of Hamilton Hall by
11:59am (noon) on Monday October 31th, 2011. (NOTE: To make marking easier,
please solve the problem in the order stated below.)
Exercises TO BE
MATH 2k03
Assignment One
This assignment is due in the MATH 2K03 locker in the basement of Hamilton Hall by
12:00pm on Monday Sept 26th, 2011.
Practice Problem ( NOT TO BE HANDED IN):
1. Go to the website
http:/www.rbcroyalbank.com/products/gic/gic-intere
MATH 2K03
Assignment Four
Assignment 4 is due on Monday, Nov 14, at 11:59 am. Please submit your solutions in the
Math 2K03 lockers in the basement of Hamilton Hall.
Note: To make the marking easier, please solve the problems in the order stated below.
EX
MATH 2k03
Solution Assignment 1
1.1.8
(a) 1000 (1.12)t = 3000, whence t = lnln.3 = 9.694 (9 years and approximately 253
1 12
days).
(b) At the end of 9 years the accumulated value is 1000(1.12)9 = 2773.08. At time s
during the 10th year, the accumulated v
Name: Text
ID #:
MATH 2K03: First Midterm (Sample Exam)
Version 1
Date: October 14, 2011, 10h30-11h20
Duration: 50 min
McMaster University First Midterm
This test includes 8 pages and 3 questions. You are responsible for ensuring your copy of
the test is
Name: Sample
ID #:
MATH 2K03: Second Midterm (Sample)
Version 1
Instructor: Huibin Cheng
Date:
Duration: 50 min
McMaster University Second Sample Midterm
This test includes 8 pages and 3 questions. You are responsible for ensuring your copy of
the test is
MATH 2K03
Assignment Five
Assignment 5 is due on Monday, Nov 28, at 11:59 am. Please submit your solutions in the
Math 2K03 lockers in the basement of Hamilton Hall.
Note: To make the marking easier, please solve the problems in the order stated below.
EX
Lecture 2
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Math 2FM3, Fall 2016, Lecture 2
(Section 1.1. continued)
1.1.3 Simple Interest
For a short period of time, simple interest is often considered,
instead of compound interest. At an interest rate of i per year, 1
grows to 1 + i at the end of on