Question
1. The face value of the Treasury Bill is $1000 and it has 40 days to maturity. What is the price of this Treasury Bill
1. The face value of the Treasury Bill is $1000 and it has 40 days to maturity. What is the price of this Treasury Bill if the discount rate is 3%?
| A. | $ 1,080 | |
| B. | $ 1,463 | |
| C. | $ 1300.32 | |
| D. | $ 996.66 |
2. An inflation linked bond (floating rate bond) matures in 2 years and has and a face value of $1,000 and a coupon rate of 10%. Inflation rate over the first year is 1% and the inflation rate over the second year is 3%. What is the amount that the investor will receive at the end of the first (1st) year?
| A. | $100 | |
| B. | $1100 | |
| C. | $101 | |
| D. | $1,111 |
3. Returning back to the question #2, remember that an inflation linked bond (floating-rate bond) matures in 2 years and has a face value of $1,000 and a coupon rate of 10%. Inflation rate over the first year is 1% and inflation rate over the second year is 3%. This time, what is the amount that the investors will receive at the end of the second (2nd) year?
| A. | $ 1,100 | |
| B. | $ 104.03 | |
| C. | $1,144.33 | |
| D. | $ 1,166.99 |
4. Which of the following is correct for stocks?
| A. | Cash flows from stocks are known and guarranteed. | |
| B. | Maturity of stocks is a specific known date. | |
| C. | The quantity of cash flows (the number of payments) from stocks are unknown. | |
| D. | End value of stocks are known. |
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Numerical Solution Of The American Option Pricing Problem Finite Difference And Transform Approaches
Authors: Carl Chiarella, Boda Kang , Gunter H Meyer
1st Edition
9814452610,9814452637
