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56 41. 42. 43. 44. 50m Chapter 9 1. 1.00 2. .82 3. 12.9% 4. 116.8% 5. ) $25,633 6. ) Option 7. 8.07% 8. $767.55 9. fl) 720 10. 13.89% . .00685 12. b) ) 1  13. ) 1,161,400 14. ) $141,500 15. 7.91% 16. ) $946.93 17. ) $857.33 18. 6.4646 19. ) 9.64% 20. 26.45% 21. Minimum = $128,614 Maximum = $129,470 b) $23,736 ) $16,658 b) Option b) 240 <f) 1  "" b) 16,600 ) 1.11% b) $128,300 b) $1036.53 b) $1000.00 b) 10.51% c) 7.975% rf) 7.953% /) Yes (v + 2 2) 24. 25. a(0 = 28. a) $3616 30. $1591 32. 33. a) (1) 1.8012 b) (1) 1.8854 34. a) 0 Z>) 94.307 35. 1250 b) 2.2035 c) 1.7628 d) .6046 *(0 = V (V + V) (2) 0 (3) 1.8343 (2) 0 (3) 1.7531 c) 312.5 i(n + l)(n + 2) 36. 38. $13,223 in 1year zero coupon bonds $15,061 in 3year zero coupon bonds $9624 in 5year zero coupons bonds 39. $9091 in 1year zero coupon bonds $8265 in 2year zero coupon bonds $7513 in 3year zero coupon bonds $6830 in 4year zero coupon bonds $6209 in 5year zero coupon bonds 40. a) $179.37 b) 12.01% 41. a) 0 < P] < .6980 b) No solution exists 42. a) .2186 < Pi< .5931 b) No solution exists Chapter 10 3. a) 8% in all years b) 0 in year 1; .01 in year 2; .Olyin year 3 c) $1294.92 rf)$1224.94 e) $1259,71 f) $1259.82 g) 26.08 4. a) .07997 b) .79390 c) .16630 d) .( 735 5. mean = 2.5772 s.d. = .0169 6. a) mean = 1.823 b) mean = 14.121 c) = .549 d) mean = 7.298 s.d. = .058 s.d. = .297 s.d. = .017 s.d. = .134 40. $4.6! $365.63 $116,500 31.33% 7 + 4
   Svmbol  Section  Description  Symbol  Section  Description          accumulated value of a decreasing annuity    retrospective loan balance   10.4  a measure of equity required to support liabiUties  {+   flat price of a bond  e{t)  10.3  error term in AR(1) and AR(2) processes  „m ,+   market price of a bond   10.5  exercise (striking) price of an option   10.5  value of a callable bond   10.2  expectation of random variable X   10.5  value of a noncallable bond    expected present value    convexity    project financing rate    redemption value of a bond    forward rate   10.5  value of a call      10.6  value of call if stock goes down   App. IV  probabihty density ftinction     fiinction being solved using iteration    contribution, deposit    face amount, par value of a bond    contribution, deposit at time /j.    present value of single payment at time n    redemption value of a serial bond    bond coupon   10.6  value of call if stock goes up    accrued bond coupon    summation of redemption values of serial bonds  Fix)  App. IV  cumulative distribution fiinction  cov[X, Y]  10.3  covariance of random variables X and    modified coupon rate on a bond    effective rate of discount  gix)   iteration formula    rate of simple discount      rate of compound discount  «1. 82  10.3  roots of die characteristic equation for die AR(2) process    factor in the declining balance method of depreciation    base amount of a bond   App. Ill  common difference in an arithmetic progression       factor in a variation of die declining balance mediod of    present value of level perpetuity starting at time n      depreciation   10.6  length of time interval in binomial lattice    duration, Macaulay duration    periodic charge of an asset    effective rate of discount from time n  1 to    present value of increasing perpetuity starting at time    nominal rate of discount convertible mthly    effective rate of interest       rate of simple interest   10.5  constants in the BlackScholes formula    rate of compound interest    sinking ftind deposit    yiekl rate, internal rate of relim   7.10  dividend on stock    investment rate when j is the reinvestment rate  D>   depreciation charge    interest rate on loan in sinkinj fiind method    annual percentage rate (APR)  Di,D2   day of date    nominal rate of interest    present value of a decreasing annuity    
436 The Symbol E, m, «2 Pv Pi 10.2 10.2 10.2 2.3 various 10.5 7.4 9.5 10.6 9.10 cumulative distribution fiinction for the standard normal distribution premium or discount on a $1 bond probabiUty bond does not default probability of price increases in binomial lattice probability bond does not default at time / proportion of fiinds in different investments in asset/liability matching price of a bond price of a put price of a serial bond summation of prices of serial bonds amount of principal repaid on loan amount of principal adjustment on bond instantaneous rate at which principal is being repaid net present value net present value based on spot rates probability bond defaults expenses at setdement on real estate mortgage that must be reflected in APR Symbol Section Description ..(m) Sjt\ j„(mi) S 5.9 project return rate 7.3 coupon rate on a bond 9.4 rate of inflation 10.4 yield rate in CAPM App. ni common ratio in a geometric progression 10.4 return on equity 10.4 riskfree rate of interest 10.4 yield rate on a specific security 10.4 appropriate rate to discount liabilities 10.4 yield rate on die market portfolio 4.3 equivalent payment per interest conversion period 6.3 level installment payment to repay a loan 8.5 level periodic return 5.2 return, wididrawal 6.6 varying installment payments to repay a loan 9.9 net receipt in immunization App. Ill sum of a progression App. Vin sum of an annuity 1U.2 variance of rate of interest 9.10 wididrawal amounts at different times in asset/liability matching accumulated value of an nperiod 3.2 annuityimmediate 3.3 annuitydue 4.4 annuityimmediate payable mdily 4.4 annuitydue payable mdily 4.5 continuous annuity App. Vin expected value of die sum of an annuity 8.5 salvage value of asset after depreciation 10.5 current stock price 8.4 sum of die first r positive integers App. IX random variable for die value of an asset Section Description 9.9 cash outflow generated by UabiUties App. VIII first moment about the origin App. VIII second moment about the origin 10.2 first moment of 1 + j, about the origin second moment of 1 + J, about the origin first moment of (1 + i,)" about the origin second moment of (1 + about the origin periodic maintenance expense month of date the term of a transaction
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