1- You just purchased a bond for $800. The bond has a face value of $1000, pays...
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Finance
1-
You just purchased a bond for $800. The bond has a face value of$1000, pays $50 in coupons each year, and has a yield to maturityof 7%. If the bond does not default (so you receive all thepromised coupons and the face value at maturity), what will be yourreturn?
0%
5%
7%
12%
2- Suppose that you are now 30 and that you would like $2million at age 65 to fund your retirement. You would like to saveeach year an amount that grows by 5% each year (that is, if yousave $1 this year, you will save $1.05 next year). Assume that thediscount rate is 8%. How much should you start saving at the end ofthis year? (Hint: first calculate the present value of the $2million, then use the growing annuity formula to calculate theamount you must save at the end of this year).
$8,920
$6,473
$15,200
$57,142
1-
You just purchased a bond for $800. The bond has a face value of$1000, pays $50 in coupons each year, and has a yield to maturityof 7%. If the bond does not default (so you receive all thepromised coupons and the face value at maturity), what will be yourreturn?
0% | ||
5% | ||
7% | ||
12% |
2- Suppose that you are now 30 and that you would like $2million at age 65 to fund your retirement. You would like to saveeach year an amount that grows by 5% each year (that is, if yousave $1 this year, you will save $1.05 next year). Assume that thediscount rate is 8%. How much should you start saving at the end ofthis year? (Hint: first calculate the present value of the $2million, then use the growing annuity formula to calculate theamount you must save at the end of this year).
$8,920 | ||
$6,473 | ||
$15,200 | ||
$57,142 |
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