EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 14A.5, Problem 2MQ
To determine
The change in yield when repayment amount is increased by $1,000 to $1,100.
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Determine the current yield on a bond with a $200 annual interest repayment as well as a $1,550 selling price.
What is the percentage change in price for a zero coupon bond if the yield changes from 6.5% to 5.5%? The bond has a face value of$1,000 and it matures in 10 years.
Use the price determined from the first yield, 6.5%, as the base in the percentage calculation
Steve promises to pay Amanda $2,000 in four years and another $3,000 four years later for a loan of $2,000 from Sandy today. What is the interest rate that Sandy is getting? Assume interest is compounded monthly.
Chapter 14A Solutions
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- Sam promises to pay Sandy $2,000 in four years and another $3,000 four years later for a loan of $2,000 from Sandy today. What is the interest rate that Sandy is getting? Assume interest is compounded monthly.arrow_forwardWhat rate of interest compounded annually would result in receipt of $22,110 in seven years from an investment of $10,000 made now?arrow_forwardA discount interest loan is a loan arrangement where the interest and any other related charges are calculated at the time the loan is closed. Suppose a one-year loan is stated as $10,000 and the interest rate is 14%. Then, the borrower pays $1,400 interest up front, thereby receiving net funds of $8,600 and repaying $10,000 in a year. What is the effective interest rate on this one-year loan?arrow_forward
- A bank pays one percent interest on savings account four times a year. What is the actual annual interest rate?arrow_forwardA five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond’s price? b) What is the bond’s duration? c) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield. d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).arrow_forwardCalculate the current yield on a bond that has an annual interest payment of $200 and a resale price of $1,550arrow_forward
- If a lender makes a simple loan of $800 for 4 years and charges 3%,then the amount that the lender receive at maturity is $(Round your response to the nearest two decimal place) Part 2 If a lender makes a simple loan of $1500 for one year and charges $50 interest, then the simple interest rate on that loan is %. (Round your response to the nearest whole number) Part 3 If a borrower must repay $106.50 one year from today in order to receive a simple loan of $100 today, the simple interest on this loan isarrow_forwardYou plan to deposit $300 each year into an IRA earning 4% interest annually. How much will you have in your account in 20 years? Your Answer: Answerarrow_forwardA $10,000 bond with a coupon rate of 1% and a yield of 2% will pay a yearly interest amount of:arrow_forward
- could you show how to determine the bond's present value without a calculator?arrow_forwardConsider a coupon bond that has a $1.000 par value and a coupon rate of 9%. The bond is currently selling for $1,150 and has 9 years to maturity. What is the bond's yield to maturity?arrow_forwardIf you borrow $ 30,000 at 6% simple interest per year for seven years, how much will you have to repay at the end of seven years?arrow_forward
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