Q1.Jinan is planning to go to graduate school in a program of study that will take three years. Jinanwants to have $8,000 available each year for various school and living expenses. If he earns 3 percent on his money, how much must he deposit at the start of his studies to be able to withdraw $8,000 a year for three years?

Answer:

Q2.Three years ago, you purchased a seven-year $1,000 par value corporate bond with a coupon interest rate of 5 percent. Today comparable bonds are paying 6.5 percent. For simplicity, we assume that the interest is paid annually.

a) What is the dollar price for which you could sell your bond?

b) What is the current yield on the bond?