01% 01% OR N=6, 11Y=01, PV=0, PMT=100, CPT FV=$ 630.97 FV= 630....

2.01% 2.01% Or N=6, 11Y=2.01, PV=0, PMT=100, CPT FV=$ 630.97 FV= 630.97*1.01 - 630.97 = $6.31 Question 21 Answer: D The difference between the FV

6

and FV

4

is the interest you earn in these two years. With your calculator PV= -1000, N=6, i=8%, PMT=0 FV=? FV

5

= 1586.87 PV= -1000, N=4, i=8%, PMT=0 FV=? FV

4

= 1360.49 Interest in Year five 5 = 226.38 Question 22 Answer: B Coupon payments = 70 * 3 = 210 Loss on sale = 1054.47 – 1037.19 = 17.28 Gain over three years = 192.72 Rate of return = (1,247.19/1,054.47)

^1/3

– 1 = .0575 = 5.75% Question 23 Answer: B N=6, I/Y=3, PV=-$1054.17, FV=1000, CPT PMT=$40 Coupon rate = 40*2/1000 = 8% 9Question 24 Answer: C N=6,PMT=40, PV=-$960, FV=1000, CPT I/Y= 4.7825 YTM=4.7825×2=9.57% Question 25 Answer: A 75 = 2.78 × (1+g)  g = 8% 12% - g Question 26 Answer: B The stock price of ABC today is: P

0

= $2.5 × 1.2 + $2.5 × 1.2

²

+ $2.5 × 1.2

²

× 1.06