# FIN 534 homework set #2-LATEST!!!(4 QUESTIONS)

**FIN**

534 – Homework Set #2

534 – Homework Set #2

1.

What

is the present value of the following uneven cash flow stream −$50, $100, $75,

and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%,

compounded annually. 2.

Suppose

that on January 1 you deposit $100 in an account that pays a nominal (or

quoted) interest rate of 11.33463%, with interest added (compounded) daily. How

much will you have in your account on October 1, or 9 months later?3.

What is the yield

to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells

for $887.00? That sells for $1,134.20? What does a bond selling at a discount

or at a premium tell you about the relationship between rd and the bond’s

coupon rate?

4. What are the total return, the current yield, and the

capital gains yield for the discount bond in Question #3 at $887.00? At

$1,134.20? (Assume the bond is held to maturity and the company does not

default on the bond.)

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