1. What is the concept of present value? What is discounting? 2. Analyze the risk profiles of...
Question:
1. What is the concept of present value? What is discounting?
2. Analyze the risk profiles of short-term bonds and long-term bonds during economic instability and fluctuating interest rates.
3. What is the yield to maturity? Why it is considered as a good measure of interest rates?
4. Calculate the present value of a $1,000 zero-coupon bond with six years to maturity if the yield to maturity is 7%
5. Property investment constitutes a large and long- term commitment to an individual. Describe the outcome of taking a property loan during fluctuating interest rates.
6. A lottery claims its grand prize is $20 million, payable over 40 years at $500,000 per year. If the first payment is made immediately, what is the grand prize worth? Use an interest rate of 12%.
7. What are the determinants for an average investor when facing a choice of investing in either properties or shares?
8. Explain the relationship between risk-loving and risk- averse investors, and the strategy of diversification.
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett