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

FIN
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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