1.
Find the nominal annual rate of interest convertible quarterly (as a % to
2 decimal places) given that:
Amount at the beginning of the period is $2000
Amount at the end of the period is $2200
Time period is 4 years and 9 months
(Work in quarters and ca
1.
Catherine is buying a house and needs to borrow $100,000. She applies
to a bank which offers her a 18 year loan at 7.6% p.a. convertible
quarterly, with repayment instalments of $ 1900 per quarter for the first
5 years followed by $R per quarter during
Elements Summary Notes
Equity and Shares:
Shareholders own a proportion of the company depending on their shareholding.
Dividends are payments to shareholders that come from company profits
Ordinary shareholders may vote on the election of board members
D
1.
Find the future value if the principal is $5600, the nominal rate of
interest is 5.4% p.a. convertible 2 times a year and the term of the
investment is 4 years.
(The wording means that j2 = 5.4%, hence the half-yearly rate is 5.4%/2.)
Student Response
1.
$900 per quarter was deposited from 1 July 2000 to 1 July 2006
inclusive into a fund paying interest at j4 = 8.8%. Calculate the size of the
fund at 1 July 2006.
(Make sure you count the number of payments carefully. Remember that if
there is a payment
3. Time Value of Money II tutorial solutions (tutorial in week 4)
1. You are in first year at university and are planning a trip to Vietnam when you
graduate at the end of 4 years. You plan to save the following amounts annually,
starting today: $625, $70
1.
A loan of $50,000 is to be repaid by equal monthly instalments over 18
years at 7.2% p.a. convertible monthly. Calculate the monthly instalment.
(7.2% p.a. convertible monthly means j12 = 7.2%.)
Student Response Value
Answer: 413.61
100% 413.61
Correct
Module 8
1) Generally, an initial public offering is:
a) an offer to potential investors of ordinary shares to newly list a company on a stock exchange.
b) an offer to potential investors of preference shares to newly list a company on a stock exchange.
c
Module 1
Overview of the Australian Financial System
Reading
Viney, C. (2011) Financial Markets Essentials, First Edition, McGraw Hill,
Sydney
Chapter 1
1.1 Barter and Money
BARTER
In the past, before money was invented, people had to trade by barter. Bar
Techniques Lecture 1
SIMPLE INTEREST AND SIMPLE DISCOUNT
Reference: Mathematics of Finance, Chapter 1
1.1 Introduction to Interest
The cost of borrowing money or the income earned on investment is called
interest.
The calculation of interest depends on ho
SIBT - ACST101
Lecture 1 Solutions
Reference: Mathematics of Finance, Chapter 1
SIMPLE INTEREST
Cost of borrowing money is called interest. The rate of
interest is the ratio of interest charged in one period to
the principal (amount borrowed)
The return f
Sydney Institute of Business and Technology
ACST101 Elements and Techniques of Finance
Introductory Tutorial : Review of Useful
Mathematics
1. Solving Equations
Most of the problems we deal with in ACST101 can
be solved by creating an equation with one mi
SIBT - ACST101
Elements Lecture 1
Solutions to Review Questions
1.
It is sometimes said that a lender buys. What does this mean? Consider a debt security.
The act of buying a debt security, from the viewpoint of the buyer, involves:
a payment of money no
ELEMENTS REVIEW QUESTIONS- WEEK 1
1. It is sometimes said that a "lender buys". What does this mean? Consider a debt
security.
2. "The existence of a secondary market for a debt security makes it easier for the
issuer of that security to raise funds". Is
Introduction
Introductory Tutorial: Review of Useful Mathematics
Reference: Tannous, Brown, Kopp, Zima (2013) Mathematics of Finance,
Appendix 1 and 2 (pages 335 to 348)
In this tutorial we will review some of the mathematical techniques that you will nee
Techniques Lecture 2
COMPOUND INTEREST
Reference: Mathematics of Finance, Sections 2.1, 2.2 to 2.3
2.1 Compound Interest, Accumulated Values
When using compound interest, the interest due is added to the principal at
the end of each interest period and th
Module 2
Banks Part 1
Reading
Viney, C. (2011) Financial Market Essentials, McGraw Hill, Sydney
Chapter 1, Section 1.3, pp.7-10
Chapter 3, Sections 2.1 to 2.4, pp.74-87
2.1 The Importance of Banks
Banks are the most important financial institution. Why?
B
ELEMENTS REVIEW QUESTIONS Week 2
1. Explain the meaning of the term liquidity. What has better liquidity a
bank accepted bill or a Central Business District Office building? Why?
2. What does it mean for a bank to be the acceptor of a commercial bill
issu
ACST101 Week 9
Markets
Learning objectives
1. Distinguish between Primary and Secondary
markets
2. Explain the operation of Debt and markets and
the pricing of debt securities
3. Explain the operation of Equity and markets
and the pricing of equity securi
ACST101 Week 6
Valuation II
Recap
Bond pricing
Also known as fixed income, bills, bank
accepted bills, T-bills, notes, T-notes
Key words: face value, coupon rate, coupon
amount, maturity, yield, par, discount,
premium, zero coupon
Price = PV of coupon
ACST101 Week 4
Valuation II
Learning objectives
1. Explain how to calculate the value of a bond and why bond prices
vary negatively with interest rate movements
2. Distinguish between a bonds coupon rate, yield to maturity and
effective annual yield, and
ACST101 Week 2
Time Value of Money I
Learning Objectives
1. Explain what the time value of money is and why it is so
important in the field of finance
2. Explain the concept of future value, including the meaning
of the terms principal, simple interest, a
PV FV 1i
0
n
PV
FV
n
i
PV
n
n
FVn PV0 1 i
FVn
i
PV
0
n
1,584.19
5000
2000
4
6%
PV
FV
n
i
FV
12,379.82
FV
ln
PV
ln 1
n
0
i
PV
FV
n
i
100
200
12%
n
6.12
FV
8
12%
n
i
PV 0 1
m
PV
i
frequency
years
nxm
i/m
FV
n m
10000
10.00%
2
2
4
5.00%
12,155.
Gantt Chart
A Gantt Charts is a way to plan out a project or a series of tasks. The chart captures the time required to
complete as well as the deadline. These charts are widely used by project managers. To construct a Ganntt
Chart you set dates across a
SIBT- ACST101
Lecture 2 Solutions
Reference: Mathematics of Finance, Sections 2.1, 2.2 to 2.3
Compound Interest
Compound interest is that interest is added to the
principal at the end of each interest period and
thereafter earns interest as well (interest
Sydney Institute of Business & Technology
ACST101 Elements and Techniques of Finance
Tutorial 1 Solutions
Q1.
(i) What is the rule for calculating the time between two dates ?
Count the first day OR the last day, but not both.
However: if the question sta
SIBT - ACST101
Elements Lecture 2
Solutions to Review Questions
1.
Explain the meaning of the term liquidity. What has better liquidity a bank accepted bill
or a Central Business District (CBD) office building? Why?
Liquidity means the ability to quickly
Tutorial 1
Simple Interest and Simple Discount
As this is a financial subject many of the questions will have dates and you will need to
calculate the time period between these dates. It is important to know how many days are in
each month.
The months wit
Wilson
This is TEST NUMBER it also goes on the Red Answer
Sheet. No seats are actually allocated in the exam
room.
In Class Test 1: SESSION 2, 2016 (Version Code: 111)
Unit Code:
ACST101
Unit Name:
Finance 1A
Duration of Exam
(including reading time if ap
Department of Applied Finance and Actuarial Studies
ACST101 : TECHNIQUES AND ELEMENTS OF FINANCE
ELEMENTS LECTURE 3 : BANK SUPERVISION
Reference: Viney (1st ed) Sections 3.5 to 3.6
Viney and Phillips (7th ed) Sections 2.5 to 2.8
Reasons for Bank Supervisi
Department of Applied Finance and Actuarial Studies
ACST101 : TECHNIQUES AND ELEMENTS OF FINANCE
TECHNIQUES LECTURE 2 : COMPOUND INTEREST (Part 1)
COMPOUND INTEREST
P = sum invested (present value)
S = final accumulation (future value)
i = rate of compoun
Department of Applied Finance and Actuarial Studies
ACST101 : TECHNIQUES AND ELEMENTS OF FINANCE
TECHNIQUES WEEK 1 : SIMPLE INTEREST & DISCOUNT
SIMPLE INTEREST
P is the sum invested or principal or present value.
S is the accumulation or future value.
(We
Department of Applied Finance and Actuarial Studies
ACST101 : TECHNIQUES AND ELEMENTS OF FINANCE
TECHNIQUES WEEK 3 : COMPOUND INTEREST (Part 2)
EXAMPLE 1
Using j1 = 8% what payment due in 5 years from now is equivalent to
(a)
a payment of $1,000 due in 2