Assignment 1
Chapter 6
- You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in year 4 in your savings account. You think that you can earn 6% per year. How much will you have in your account in Year 6?
- Bank X promises to pay you $5,200 per year for 8 years, whereas Bank Y offers to pay you $7,300 per year for 5 years.
a) Which of these cash flow streams has the higher present value (PV) if the discount rate is 5 percent?
(Hint: compare the PVs of annuity X ($5,200 per year for 8 years) with annuity B ($7,300 per year for 5 years)
b) Which one should you choose between Bank X and Bank Y?
- Today, Dinero Bank offers you a $60,000, five-year term loan at 7.5 percent annual interest (APR). What will your annual loan payment be? (Hint: Find PMT)
- You buy an annuity that will pay you $24,000 a year for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent? (Hint: annuity due)
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 4.3 percent, how much will you pay for the policy? (Hint: Find PV of perpetuity)
- Find the EAR in each of the following cases:
a. APR 9% with quarterly compounding
b. APR 18% with monthly compounding
c. APR 14% with semi-annual compounding
- Find the APR, or stated rate, in each of the following cases:
a. EAR 11.5%, semi-annual compounding
b. EAR 12% with quarterly compounding
Chapter 7
- Consider a 3-year bond with a face value of $1,000 that has a coupon rate of 7%, with semi-annual payments.
a. What is the dollar amount of each coupon from this bond?
b. How many times of coupon payments will be made to the maturity?
- Assume that a bond will make coupon payments every six months as shown on the following timeline:
a. What is the coupon rate (in percent)?
b. What is the face value?
- What is the bond price of $1,000 bond with 6% coupon rate, annual coupons, and 2 years to maturity if the YTM is 8%?
- What is the bond price of $1,000 bond with 6% coupon rate, semi-annual coupons, and 2 years to maturity if the YTM is 8%?
- Suppose a 10-year, $1000 bond with an 8% coupon rate and annual coupons is sold for $1034.74.
a. What is the bondâs YTM?
b. Is the YTM higher or lower than the coupon rate?
Sample Solution
This paper describes a process of self-evaluation, reflection upon learning, and planning for future developments. As well as considering the learning points which have been successfully internalized over the course of the semester, it will incorporate reflection on strengths and weaknesses, and begin to outline future communication with putative employers. In addition to presenting some analysis of the formal and academic aspects of the experience, it will discuss the interpersonal aspects of learning, and the development of those capacities which may have professional and vocational applications. As Stenhouse points out, âA curriculum is an attempt to communicate the essential principles and features of an educational proposal in such a form that it is open to critical scrutiny and capable of effective translation into practice.â (1), However, negotiating the formal structures and requirements of the curriculum is only one aspect of the learning process. A perceptible process of transformation has begun in education, away from a lecture based didactic approach and towards adaptable, flexible modes of learning and teaching. Accordingly, this record of reflective learning will discuss the use of oral, listening and communication skills, considering self-management in group situations. In conclusion, it will present a flexible plan for the future, outlining the skills which need to be developed and providing some indicative targets and points for action. This piece presents my own reflections, and where appropriate, makes reference to appropriate research and analysis by published authorities. From a purely personal perspective, undertaking the module involved a reconsideration of my own identity and purpose, and the sorting through of the multiple dimensions and preoccupations of my life. As Hall points out, ââ¦no one has one identity; and indeed those identities may be in tension (one example would be the ways in which âmotherâ and âworkerâ are often understood as existing in tension.â (2) Consequently, it was important to reconfigure ones self-identity and direction in the light of new knowledge and perspectives. In this respect, it is important to be aware that personality and self-image are often key determinants in setting personal objectives, defining outcomes, and constructing the parameters within which any one of us can grow and interact with their environment. As Elliot puts it, âWe often think of the self as primarily a private domain, an inner realm of personal thoughts, values, strivings, emotions and desires. Yet this view, which seems largely self-evident, is in contrast to the way in which sociologists study the framing of personal identity and the self.â (3) Therefore, locating oneself within a social continuum, in some ways a necessary social skill and a pre-requisite of social/group orientation, can be both limiting and damaging. It is also important to consider cultural identity and the way national, regional, chronological and even familial micro cultures are profoundly constructive of our own life politics. It has become a truism in life-politics that emotional awareness â or emotional intelligence â is a fundamental determinant of how individuals will approach, engage with, and function with regard to social structures, whether the latter are in the public or private sphere. As Goleman explains, âself-awareness â recognizing a feeling as it happens â is the keystone of emotional intelligenceâ¦.the ability to monitor feelings from moment to moment is crucial to psychological insight and self-understanding.â (4) Some individuals may have this capacity through innate cognitive ability, whilst others must attempt to construct it using deliberately reflective techniques. However, the experience of the module has illustrated to me that it is not an option: interpersonal effectiveness basically demands that individuals exe>
This paper describes a process of self-evaluation, reflection upon learning, and planning for future developments. As well as considering the learning points which have been successfully internalized over the course of the semester, it will incorporate reflection on strengths and weaknesses, and begin to outline future communication with putative employers. In addition to presenting some analysis of the formal and academic aspects of the experience, it will discuss the interpersonal aspects of learning, and the development of those capacities which may have professional and vocational applications. As Stenhouse points out, âA curriculum is an attempt to communicate the essential principles and features of an educational proposal in such a form that it is open to critical scrutiny and capable of effective translation into practice.â (1), However, negotiating the formal structures and requirements of the curriculum is only one aspect of the learning process. A perceptible process of transformation has begun in education, away from a lecture based didactic approach and towards adaptable, flexible modes of learning and teaching. Accordingly, this record of reflective learning will discuss the use of oral, listening and communication skills, considering self-management in group situations. In conclusion, it will present a flexible plan for the future, outlining the skills which need to be developed and providing some indicative targets and points for action. This piece presents my own reflections, and where appropriate, makes reference to appropriate research and analysis by published authorities. From a purely personal perspective, undertaking the module involved a reconsideration of my own identity and purpose, and the sorting through of the multiple dimensions and preoccupations of my life. As Hall points out, ââ¦no one has one identity; and indeed those identities may be in tension (one example would be the ways in which âmotherâ and âworkerâ are often understood as existing in tension.â (2) Consequently, it was important to reconfigure ones self-identity and direction in the light of new knowledge and perspectives. In this respect, it is important to be aware that personality and self-image are often key determinants in setting personal objectives, defining outcomes, and constructing the parameters within which any one of us can grow and interact with their environment. As Elliot puts it, âWe often think of the self as primarily a private domain, an inner realm of personal thoughts, values, strivings, emotions and desires. Yet this view, which seems largely self-evident, is in contrast to the way in which sociologists study the framing of personal identity and the self.â (3) Therefore, locating oneself within a social continuum, in some ways a necessary social skill and a pre-requisite of social/group orientation, can be both limiting and damaging. It is also important to consider cultural identity and the way national, regional, chronological and even familial micro cultures are profoundly constructive of our own life politics. It has become a truism in life-politics that emotional awareness â or emotional intelligence â is a fundamental determinant of how individuals will approach, engage with, and function with regard to social structures, whether the latter are in the public or private sphere. As Goleman explains, âself-awareness â recognizing a feeling as it happens â is the keystone of emotional intelligenceâ¦.the ability to monitor feelings from moment to moment is crucial to psychological insight and self-understanding.â (4) Some individuals may have this capacity through innate cognitive ability, whilst others must attempt to construct it using deliberately reflective techniques. However, the experience of the module has illustrated to me that it is not an option: interpersonal effectiveness basically demands that individuals exe>