Question

9. Mr X invests S1000 at a 8% nominal rate for one year of the infattomate is 3% what is the exact real rate of return that he receives A) 8.00% B) 11.24% C) 11.00% D) 5.00% E) 4.85% 10. The 4.8 percent bond of XYZ Carp has a free value of $1.000 a man of 12 years semanal interest payments, and a yield to maturity of 46 percent. What is the c a ket price of the bond A) S1059.68 B) 5942.43 C) $1000.00 D) $942.99 E) 90521

Answer 1

(1+nominal rate of interest) = (1+real rate) X (1+inflation rate) Exact real interest rate = 4.85% (1.08/1.03)-1

COUPON RATE 4.80% YEAR TO MATURITY 12.00 NPER 24 (years to maturity x 2) PMT 24 (face value x coupon rate)/2 FACE VALUE 1000 YIELD 5.46% RATE = YIELD/2 = 2.73% PRICE = PV = $942.45 -PV(rate,nper,pmt,fv) -pv(2.73%,24,24,1000)