Three months ago, Jim purchased $11,000 of U.S. Treasury bonds. These bonds have a 30-year maturity period, and they pay dividends every three months at an APR of 17%. However, today's interest rates for similar securities have risen to a (17+1)%APR (compounded quarterly). In view of the interest-rate increase to (17+1)%, what is the
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- When computed using an effective interest rate of i, it is known that the present value of $2,000 at the end of each year for 2n years plus an additional $1,000 at the end of each of the first n years is $52,800. Using this same interest rate, the present value of an n year deferred annuity-immediate paying $4,000 per year for n years is $27,400. Find n. [HINT: First find an|i and a2n|i then νn and i.]An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. What i are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding bimonthly (every two months). What is the effective interest rate that Rahul would pay for the loan? ○ 3.945% 4.152% 4.067% 04.186 % Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% comanded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days,…If a credit card pays 5% interest compounded quarterly, what is the effective annual interest rate? Oa. 6% Ob.5% Oc 5.4% Od.5.09%
- Lorenz curves also can be used to provide a relative measure of the distribution of the total assets of a country. Using data in a report by the economic committee of a certain country, an economist produced the following Lorenz curves for the distribution of total assets in the country in 1963 and 1983, shown below. f(x) = x10 Lorenz curve for 1963 g(x) = x13 Lorenz curve for 1983 Find the Gini index of income concentration for each Lorenz curve and interpret the results. .... What is the Gini index for 1963? (Round to three decimal places as needed.) What is the Gini index for 1983? (Round to three decimal places as needed.) Interpret your results. O A. Total assets were more equally distributed in 1963 O B. Total assets were more equally distributed in 1983 O c. Total assets were distributed the same in 1963 as in 1983.Suppose that you are forecasting one-year T-bill rates issued by Bangladesh Bank which are 5.25%, 6.15%, 8.50%, 9.25%, 10.10% in year 1,2,3,4 and 5 respectively. There is a liquidity premium of .15% per year for holding 3-year or longer-term bond. Would you be indifferent between purchasing these T-bills each year for the next 5 years or buy a 5-year Family Bond at 7.1% interest rate? Briefly illustrate your answer using the relevant theory of term structure.1. How many years will a deposit triple itself at an interest rate of 7% per annum compounded continuously? 2. A nominal annual rate of interest of 7%, compounded continuously, has an effective annual interest rate of_. 3. At what interest rate, compounded quarterly, will an investment double in 5 years? 4. A house and lot costing P2 Million was bought at a downpayment of P500,000 and P1 Million after one year. The remaining balance will be paid annually, what is the required payment? 5. Mr. Fernandez borrowed P25,000 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000 in 3year and the balance in 2 years. How much must he pay at the end of two years if money is worth 5% compounded continuously? 6. What is the nominal rate of interest compounded continuously for 8 years if the present worth factor is equal to 0.6187835. 7. If P 8000 is borrowed for 105 days at 12% per annum. How much will be due at the end of 105 days? 8. A man buys an electric fan from a merchant that…
- A person buys a piece of property for P100,000 down payment and ten deferred semi-annual payments of P8,000each starting three years from now. What is the present value of the investment if the rate of interest is 12% compounded semi-annually? What is the P total? A. 144,004 B. 108,000 C. 143,999.08Suppose P100, 000 is deposited in an account that earns 8% compound interest that is compounded semi-annually. In how many years will the initial investment triple? a.13.01 years b.14.01 years c.14 years d.13 years As advised by your financial adviser, you started to save P15,000 and deposited it every in the beginning of each month in a bank with 6% interest compounded annually, How much is the total amount after 8 years? (Hint: Future Value of General Annuity Due) a. 4,935,561.09 b. 3,495,561.09 c. 5,493,561.09 d. 9,435,561.09What series of equal annual payments is equivalent to a series of decreasing payments as follows: $5,000, $4,000, $3,000, $2,000, $1,000 if the interest rate is 10 percent per year? Or in other words, it can be recognized as: 1- series of this amount $ and 2- a series of this amount $
- True or False 1. The future worth of a perpetuity from one (1) to n years is undefined because as n approaches infinity, the valuebecomes 0. 2. Perpetuity is derived from the fact that the number of compounding periods approaches to infinity while the nominal interest rate approaches to 0. This then lumps the expression into e.3. An amortization of a debt is in a form of a gradient series of P5,000 on the first years, P4,500 on the second year, P4,000 on the third year and P3,500 on the fourth year. What is the equivalent present worth of the debt if interest is 5%?For a principal borrowed under %14 nominal interest rate, compounded annually, a bank offers two alternative payment plans in gradient series with 35 years of payment horizon Base payment of $1000 at the end of the first year, and at the end of every next year, the payment size will be increased by $25 compared to the previous year. Base payment of $800 at the end of the first year, and at the end of every next year, the payment size will be increased by a constant $x compared to the previous year. What is x? Choose the closest value to your answer. For a principal borrowed under %14 nominal interest rate, compounded annually, a bank offers two alternative payment plans in gradient series with 35 years of payment horizon Base payment of $1000 at the end of the first year, and at the end of every next year, the payment size will be increased by $25 compared to the previous year. Base payment of $800 at the end of the first year, and at the end of every next year, the payment size…