A bond pays $2500 in 10 years an earns an annual interest rate of 2.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places.
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A bond pays $2500 in 10 years an earns an annual interest rate of 2.75%. What is the
Assume annual compounding. Round your answer to two decimal places.
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- Calculate the present value of an annuity with monthly deposits of $2,000 at 5% for 20 years. Discuss how the present value of an annuity will change if the deposit is doubled?Determine the current yield on a bond with a $200 annual interest repayment as well as a $1,550 selling price.Eileen buys a perpetuity-immediate with annual payments for a purchase price of X. The first payment is 1.02, the 2nd payment is 3% greater than the first, the third payment is 2% greater than the second, and so on, with the increase in future payments alternating between 3% and 2%. At the purchase price of X, Eileen's effective annual interest yield rate is 3%. Determine X. Hint: I thought of the even-year payments and odd-year payments separately. (a) 102 (b) 103 (c) 204 (d) 205 Answer: (e) 206
- You 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: AnswerCalculate the price of a zero-coupon bond that matures in 20 years if the market interest rate is 3.8 percent. Assume semiannual compounding. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)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.
- Calculate the current yield on a bond that has an annual interest payment of $200 and a resale price of $1,550Steve 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.A 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).
- Suppose Alice decides to put some money in a new account that compounds twice per year. At the beginning of the year, before the first compounding, she deposits $10,000. At the end of the year, she finds $11,000 in the account. What was the interest rate on this account?Kelsey purchases a retirement annuity that will pay her $1,500 at the end of every six months for the first ten years and $700 at the end of every month for the next six years. The annuity earns interest at a rate of 3.6 % compounded quarterly. Question 5 of 6 a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Kelsey receive from the annuity? Round to the nearest centYou are offered an investment that would earn $ 2,100 a year for 10 years. The first payment would be made in exactly 3 years. Knowing that the annual effective interest rates will be 7% for the next five years, 8% for the next two years and 6% afterwards, find the value of this investment today. Use FACTOR NOTATIONS in your calculations.