Question

Just need answers

Question 1

Say that the interest rate is 12% and you invest $400 today and then another $400 exactly one year from today. What is the total future value of these investments two years from today?

$884.44

$899.12

$949.76

$991.2

Question 2

A coupon bond pays $400 at the end of each year for 3 years, and at the maturity date in 3 years, in addition to the final coupon payment, the bond also makes a face value payout of $1,500. If the interest rate is 13% then this bond has a present value of

$1,984.0

$1,999.2

$2,085.5

$2,111.1

Question 3

An investor buys a coupon bond and holds it for exactly one year and then sells it in a secondary market prior to maturity. The investor buys it for $4,000, sells it one year later for $4,110 and receives a coupon payment of $60. Then the one-year rate of return from holding this bond is

1.5%

2.55%

3.33%

4.25%

Question 4

An investor buys a bond for $3,800 that pays out $4,525 in 3 years. This bond has a yield to maturity of (choose closest value)

4%

6%

9%

11%

Question 5

You just found out that you have $674.67 in a savings account. Your uncle opened the account in your name exactly 6 years ago, and deposited $X in the account. Then he put in another $85 three years after opening the account. Other than $X and the $85, there were no other deposits. If the interest rate for the past 6 years has been 14%, what is X? (choose the closest number)

$211

$250

$276

$299

Answer 1

Q. 1 Option 2

Year	Deposit	FV = (400*(1+0.12)^n
1	400	448
2	400	949.76

Q. 2 Option 1

Year	Cash flow	Present value
1	400	353.98
2	400	313.26
3	400	277.22
3	1500	1039.58
		1984.04

Q. 3 Option 4

=170/(4000) = 4.25%

Q.4 Option 2

=(4525/3800)^(1/3)-1 = 6%

Q.5 Option 3

Year	Deposit	Cumulative	Savings at the end of year
1	276	276.00	314.64
2		276.00	314.64
3	85	399.64	455.59
4		455.59	519.37
5		519.37	592.08
6		592.08	674.98