1. Suppose that demand and supply for a
security is given by the subsequent equations:
Demand: BD = 250 â zero.15b,
Present: BS = 100 + zero.05b,
the place b is the price of the security in
a. Calculate the equilibrium worth and
equilibrium quantity of the security.
b. Suppose that the supply curve shifts to
BS = 150 + zero.05b. Uncover the model new equilibrium
worth and equilibrium quantity of the
c. Make clear in phrases, if the equilibrium
worth and equilibrium quantity rise or fall after the
shift in present curve.
2. Suppose you are 22 years and would like
to get married on the age of 27. To start a model new life,
you need to have $100,000. If the
price of curiosity is 6 p.c, about how rather a lot do you
need to save numerous proper now?
three. George has almost $30,000 in his account.
Some years up to now he put $21,320 into his account
that promised to pay 5 p.c curiosity.
What variety of years up to now did he open his account?
4. four years up to now Matt deposited some money
into an account. He earned 5 p.c on this
account and now has a stability of about
$30,388. How rather a lot did he deposit into his account
when he opened it?
5. Take into consideration a coupon bond that pays $100
yearly and repays its principal amount of
$1000 on the end of ten years. If the pace
of low value is eight p.c, what is the present value
of the bond?
6. Take into consideration a two-year coupon bond that has
a present value of $10,000. If the pace of
low value is three p.c, and the price made
on the end of each yr is $250, what is the
principal amount to be repaid on the end of
7. Suppose that you simply’re considering the
purchase of a security that pays $600 yearly and
repays its principal amount of $10,000 at
the tip of four yr.
a. How rather a lot would you be ready to pay for
this security if the market price of curiosity is 6
b. Suppose that you have merely purchased the
security, and all the sudden the market curiosity
worth falls to 5 p.c. What is the
c. Suppose that one yr has elapsed, you
have obtained the first value of $600, and
the market price of curiosity continues to be 5
p.c. How rather a lot would one different investor be ready
to pay in your security?
d. Suppose that two years have elapsed
since you obtain the security, and you have got
obtained the first two funds of $600
each. Now suppose that the market curiosity
worth all the sudden jumps to 10 p.c. How rather a lot
would one different investor be ready to
pay in your security?
eight. You buy a authorities bond that pays
curiosity twice a yr. The curiosity value is $300
each six months. The bond matures in six
years. The face value of the bond is $10,000.
The annual market price of curiosity is 6
a. What is the present value of the bond?
Current your work.
b. After six months go by, you receive the
first curiosity value of $300. The annual
market price of curiosity has declined to 5
p.c and in addition you resolve to advertise the bond. What’s
the bondâs present value should you advertise?
Current your work.
c. What’s your complete return from proudly proudly owning
the bond for six months (expressed at an annual
worth, in proportion components, with two
decimals)? Current your work.
9. Suppose you take out a vehicle mortgage of
$18,000 for 5 years at an annual price of curiosity of eight
p.c, with funds to be made month-to-month.
What is going on to your month-to-month funds be?
10. Suppose you take out a home equity mortgage
of $250,000 for 25 years at an annual price of curiosity
of 6 p.c, with funds to be made
month-to-month. What is going on to your month-to-month funds be