A four-year promissory note for $3800 plus interest at 9.5% compounded semiannually was sold 18 months before maturity for $4481. What quarterly compounded nominal rate of return will the buyer realize on her investment? (Do not round the intermediate calculations. Round your answer to 1 decimal place.) Quarterly compounded nominal rate of return %

A four-year promissory note for $3800 plus interest at 9.5% compounded semiannually was sold 18 months before maturity for $4481. What quarterly compounded nominal rate of return will the buyer realize on her investment? (Do not round the intermediate calculations. Round your answer to 1 decimal place.) Quarterly compounded nominal rate of return %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 26P

See similar textbooks

Similar questions

You purchase a TIP note with an onginal principal amount of $1,000,000 and a 4 percent annual coupon (paid semiarnnually). What will the first coupon payment be if the semiannual inflation over the first six months is 2 percent? (round your answer to 2 decimal places)
Suppose that a company enters into a FRA that is designed to ensure it will receive a fixed rate of 4.8% on a principal of $100,000,000 for a six-month period beginning in 4 years. If, in 4 years the six-month LIBOR is 5.2% for the ensuing six-month period, what is the value of the FRA at that point in time (i.e. in 4 years)? (Required precision: 0.01 +/- 0.01) (All interest rates in this problem are annual rates, compounded semi-annually)
Suppose that an investment promises to pay a nominal 9.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounded (a) annually? (b) semiannually? (c) quarterly? (d) monthly? (e) daily (365 days)? (f ) continuously? (Note: Report your answers accurate to four decimal places –e.g., 0.0987 or 9.87%.)
An ARM is made for $150,000 for 30 years with the following terms:Initial interest rate 7 percentIndex 1-year TreasuriesPayments reset each yearMargin 2 percentInterest rate cap NonePayment cap 5 percent increase in any yearDiscount points 2 percentFully amortizing; however, negative amortization allowed if payment cap reached Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows:Beginning of year (BOY) 2 7 percent; (BOY) 3 8.5 percent; (BOY) 4 9.5 percent;(BOY) 5 11 percent.Compute the payments, loan balances, and yield for the ARM for the five-year period.
The current amount A of a principal P invested in a savings account paying an annual interest rate r is given by A = P(1+r/n)^(rt) where n is the number of times per year the interest is compounded. For continuous compounding, A = Pe^(rt). Suppose $10,000 is initially invested at 2.5 percent (r = 0.025). a. Plot A versus t for 0 ≤ t ≤ 20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding (n = 12). Show all four cases on the same subplot and label each curve. On a second subplot, plot the difference between the amount obtained from continuous compounding and the other three cases. b. Redo part a, but plot A versus t on log-log and semilog plots. Which plot gives a straight line?
A equal principal payment loan of $3000 is amortized by means of 12 quarterly payments, beggining one quarter after the loan is made. The interest rate is 8% APR compounded quarterly. a. What is the total payment due the second quarter? b. What is the current portion of debt in the 4th quarter?
The Treasury Department auctioned $33 billion in 3-month bills in denominations of $10,000 at a discount rate of 6.300%. What would be the effective rate of interest? Note: Use calendar year. Do not round intermediate calculations. Round your answer to the nearest hundredth percent.