Economics (7th Edition) (What's New in Economics)
Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 25, Problem 25.3.7PA
To determine

Savings and loans.

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Question 3 (2 marks): The Cash Grab Credit Card Company charges a nominal 28 percent interest on overdue accounts, compounded daily. What is the effective annual interest rate? Show your answer to two decimal places of a percent.
Making the assumption of no compounding interest , suppose you purchase a perpetuity bond from CosoNostra Pizza Inc. for $ 4,000 with an annual coupon rate of 3 % . Specify all answers to the nearest dollar , and assume a discount rate equal to that of the current interest rate . Changes in the economy push interest rates up from 3 % to 5 % . For how much can you sell your bond following this change in market interest rates ?
Calculate the present value of a $1,300 discount bondwith seven years to maturity if the yield to maturity is 8%.
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