Question

Linda David agreed to lend money to Alex at a special interest rate
of 9%per year. On the condition that he borrow enough that he would
pay her $400 in interest over a 3 year period. What was the minimum
amount Alex could borrow?

Answer #1

David decided to invest an amount of money in a bank that pays
20.00% nominal interest, compounded monthly, to provide him with an
annuity of $10,800 (per year) for 6 years, starting 12 years from
now. If the interest rate remains constant over this entire period.
What amount should he invest?

Assume that a bank can borrow or lend money at the same interest
rate in the LIBOR market. The 91-day rate is 5% per year, and the
182-day rate is 5.2%. Assume the LIBOR rates are continuously
compounded. The Eurodollar futures price for a contract maturing in
91 days is quoted as 96.
Could you find any arbitrage
opportunities?
How would you conduct the arbitrage? What should be the
arbitrage profit?

Your mom will lend you money so long as you agree to pay her
back within five years and you offer to pay her the rate of
interest that she would otherwise get by putting his money in a
saving account. Based on your earnings and living expenses, you
think you will be able to pay him 8000$ in one year and then 10000$
each year for the following next four years. If your mom would
otherwise earn 5% per...

QUESTION 1:
Alex and Carmila agreed to buy the fixed assets and goodwill of
a business for a lump sum consideration of RM400,000 payable in
full on the transfer of the business in 2018. Not having enough
money, they borrowed RM200,000 from Taram Ltd, located in
Indonesia, which is repayable in full after two years. In the
meantime, Alex and Carmila are to pay interest every three months
starting from 1 March 2019 at the rate of 10% per annum...

Paul takes a loan of $225,000 from the bank at 7% interest rate
per year over a 10-year period. He plans to pay off the loan in 10
yearly payments of $16,000 each, and with the money that he is
going to inherit from his grand parents. How much should he inherit
to pay off the entire loan if the grand parents give him the money
at the end of the 4th year and he hands over the entire amount...

Paul takes a loan of $150,000 from the bank at 4% interest rate
per year over a 10-year period. He plans to pay off the loan in 10
yearly payments of $10,000 each, and with the money that he is
going to inherit from his grand parents. How much should he inherit
to pay off the entire loan if the grand parents give him the money
at the end of the 5th year and he hands over the entire amount...

Paul takes a loan of $225,000 from the bank at 7% interest rate
per year over a 10-year period. He plans to pay off the loan in 10
yearly payments of $16,000 each, and with the money that he is
going to inherit from his grand parents. How much should he inherit
to pay off the entire loan if the grand parents give him the money
at the end of the 4th year and he hands over the entire amount...

I can borrow money at a rate of 8% per year, but that I only
earn 2% per year on money I loan. A friend has recently offered me
an investment opportunity; if I make a $10,000 investment today,
then I will receive a guaranteed $10,500 in one year. I currently
have $10,000 in the bank, but I plan on consuming $8,000 – meaning
that I only have $2,000 that I could invest. Can/should make the
investment? What is the...

I can borrow money at a rate of 8% per year, but that I only
earn 2% per year on money I loan. A friend has recently offered me
an investment opportunity; if I make a $10,000 investment today,
then I will receive a guaranteed $10,500 in one year. I currently
have $10,000 in the bank, but I plan on consuming $8,000 – meaning
that I only have $2,000 that I could invest. Can/should make the
investment? What is the...

You decide to lend your sister, who has never defaulted on a
loan (ie. ρd=0), $1000 for one year. At the end of the year she
agrees to pay you $1040. a)What is the nominal interest rate you
and your sister agreed upon?
b)Suppose you expected the inflation rate, πe, to be 3%. What
was the realrate of interest that you expectto receive?
c)However, at the end of the year,you realized that the
inflation rate was actually 5%. What is...

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