Exam 8: Mathematics of Finance: An Introduction to Basic Concepts and Calculations

What is the current price of an existing Treasury bond that pays a fixed coupon of 6.4% per annum per $100 face value,compounding half-yearly,and maturing in four years? Current market yields are 6.8% per annum.

The main difference between an annuity and an annuity due lies in the:

A company invests its surplus funds by buying a commercial bill with a face value of $100 000,at a current yield to maturity of 7.35% per annum and 120 days to maturity.After 45 days,the bill is sold at a yield of 6.84% per annum.What rate of return did the company earn on the bill?

If compounding of interest occurs more often than annually,explain how you would compare three interest rates of the same amount: one that is quoted annually,one semi-annually and one quarterly.At which rate would you expect the same investment amount to grow the most over ten years?

When a company issues a commercial bill it is said to discount it.

What is the future value of $12 000 on deposit for four years at 7.00% per annum simple interest?

A bank bill with a face value of $500 000 and 90 days to maturity is purchased with a yield to maturity of 6.92% per annum.After the bill has been held for 28 days,it is sold at a yield of 6.78% per annum.What is the holding period yield for the holder of the note?

An $8000 bank deposit earning compound interest of 8.21% per annum grows to _______ in 5.25 years.

What is the simple annualised interest rate on a company transaction to raise $100 000 financing by drawing a bank bill with a face value of $104 000,payable in 120 days?

Calculate the effective annual interest rate if your bank quotes you 10% per annum,compounded quarterly.

The term 'simple',with regard to interest,refers to the fact that:

The present value of an ordinary annuity of $1000 each year for six years,assuming current market interest rates,is:

When a company obtains an interest-only business bank loan and is required to make annual interest payments on the principal borrowed and repay the full principal at the maturity date,the type of interest is called simple interest.

If you invest $1600 for a year at 6.8% per annum simple interest,how much interest will you earn?

If you borrow $100 000 for 90 days with simple interest of 6.2% per annum,what is the total amount of interest paid on the loan?

In regard to an annuity,if the first cash flow is made immediately,it becomes:

When will a future value calculated with a simple interest rate exceed a future value calculated with compound interest at the same rate?

If you are saving for an overseas trip and put $400 every month into an account paying 6.8% per annum,compounding monthly,how much will you have at the end of 3.25 years?

Explain the differences(s)between an interest rate and a rate of return.

If you invest $7500 for a year at 7.4% per annum simple interest,what is the value of your investment at the end of the year?