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Problems Set 2 Fin 7000

Autor:   •  October 22, 2016  •  Course Note  •  1,798 Words (8 Pages)  •  887 Views

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Problem Set 2 FIN 7000

(5pts) Problem 1 [SAIR to EAR Conversion] [Discounting & Compounding]: 

Fill in the table below for each of the following interest rates:

        Case:

  1.    = 0.12/1 =0.12[pic 1][pic 2]

 =  = 0.12[pic 3][pic 4]

 = 1000/  = $786.627[pic 5][pic 6]

  1.    = 0.12/2 =0.06[pic 7][pic 8]

 =  = 0.1236[pic 9][pic 10]

 = 1000/  = $780.984[pic 11][pic 12]

  1.    = 0.12/4 =0.03[pic 13][pic 14]

 =  = 0.12550881[pic 15][pic 16]

 = 1000/  = $778.008[pic 17][pic 18]

  1.    = 0.12/12 =0.01[pic 19][pic 20]

 =  = 0.1268250301[pic 21][pic 22]

 = 1000/  = $775.963[pic 23][pic 24]

  1.   = e^0.12 -1 =0.1274968516[pic 25][pic 26]

 = 1000/  = $775.963[pic 27][pic 28]

        

                                Compounding                                                      PV of $1000

Case         Stated Annual Rate         Periods Per Year        Effective Annual Rate                     paid at t = 2

   1                    .12                                      1                                             0.12                                              $786.627

   2                    .12                                      2                                             0.1236                                          $780.984

   3                    .12                                      4                                 0.12550881                            $778.008

...

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