Question
Q1-Suppose the present value of $524 paid at the end of one year is $495. What is the one-year discount rate? Q2-The current price of
Q1-Suppose the present value of $524 paid at the end of one year is $495. What is the one-year discount rate?
Q2-The current price of a bond is $952.40. Its price next year is $925.90. What is the discount factor?
Q3-You purchase a two-year $1000 face value bond at par. The bond has a 6% coupon rate.However, do to cashflow problems, the company misses the first coupon payment, but pays both coupons payments in year 2. What is your rate of return?
Q-Using the information, in the previous question, suppose the company pays all of the coupon payments on time. What is your rate of return?
Q-5-Someone offers you the following deal. They will pay you $5000 in two years if you agree to pay them $4500 today. If you accept the deal, what is your rate of return?
Q6-Assume the future value of $550 paid at the end of one year is $675. What is the growth factor?
Q7-Assume the present value of $262 paid at the end of one year is $195. What is the one year discount factor?
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