Answer a.
Price in 2017 = $75
Price in 2037 = $150
Time Period = 20 years
Rate of Return = (Price in 2037 / Price in 2017)^(1/20) -
1
Rate of Return = ($150 / $75)^(1/20) - 1
Rate of Return = 2^(1/20) - 1
Rate of Return = 1.0353 - 1
Rate of Return = 0.0353 or 3.53%
Answer b.
Rate of Return during first 10 years = 0.13%
Price in 2027 = Price in 2017 * (1 + Rate of Return)^10
Price in 2027 = $75 * 1.0013^10
Price in 2027 = $75.98
Answer c.
Price in 2027 = $75.98
Price in 2037 = $150
Time Period = 10 years
Rate of Return = (Price in 2037 / Price in 2027)^(1/10) -
1
Rate of Return = ($150 / $75.98)^(1/10) - 1
Rate of Return = 1.974204^(1/10) - 1
Rate of Return = 1.0704 - 1
Rate of Return = 0.0704 or 7.04%
Suppose the government decides to issue a new savings bond that is guaranteed to double in...
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 24 years. Assume you purchase a bond that costs $25. a. What is the exact rate of return you would earn if you held the bond for 24 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the...
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16. b. If you purchased the...
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 22 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 22 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the...
Chapter 5 Homeworlk Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 16 years. Assume you purchase a bond that costs $25. a. What is the exact rate of return you would earn if you held the bond for 16 years until 10 points it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)...
Solve for the unknown number of years in each of the following (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.): Years Present Value $ 630 880 19,100 22,200 Interest Rate 8 % 12 18 Future Value 1.496 2,496 392,101 403,794 Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 24 years. Assume you purchase a bond that costs $25. a....
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $5,000 in March 2045, but investors would receive nothing until then. Investors paid DMF $1,790 for each of these securities; so they gave up $1,790 in March 2015, for the promise of a $5,000 payment 30 years later. a. Assuming you purchased the bond for $1,790, what rate...
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $2,000 in March 2055, but investors would receive nothing until then. Investors paid DMF $610 for each of these securities; so they gave up $610 in March 2015, for the promise of a $2,000 payment 40 years later. a. Assuming you purchased the bond for $610, what...
In March 2018, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $5,000 in March 2048, but investors would receive nothing until then. Investors paid DMF $850 for each of these securities; so they gave up $850 in March 2018, for the promise of a $5,000 payment 30 years later. a. Assuming you purchased the bond for $850, what rate...
Please help. Due soon :)
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $1,000 in March 2055, but investors would receive nothing until then. Investors paid DMF $350 for each of these securities; so they gave up $350 in March 2015, for the promise of a $1,000 payment 40 years later. a. Assuming you purchased the...
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $1,000 in March 2035, but investors would receive nothing until then. Investors paid DMF $440 for each of these securities; so they gave up $440 in March 2015, for the promise of a $1,000 payment 20 years later. a. Assuming you purchased the bond for $440, what...