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Date Posted: 20:35:46 07/24/01 Tue
Author: Charles Hodges
Subject: Re: I am getting different answers to some sample test Questions
In reply to: Meera 's message, "I am getting different answers to some sample test Questions" on 15:14:24 07/24/01 Tue

>In set 2 , question 3 about the uncle depositing money
>in brokerage account..i am getting 19570 as the answer
>i took 5 years and not 4


You are getting the value at the end of year 5, the question asks for year 5.

. For ques -5 on the set 2
>..i am getting 93.21 as percentage of total pmts.

I think this agrees with my answer.

how
>do u go about question 6 -set 2.
You will not have a problem this hard. The key is semi-annual cash flows mean a semi-annual interest rate. We know that the effective rate for quarterly compounding is 12.55%. To find out the nominal rate assuming semiannual compounding, EFF%=12.55, C/Y=2, CPT NOM%=12.18, thus the semiannual rate is I/Y=12.18/2=6.09, N=6, PMT=500, FV=0, CPT PV=2451.72




In question 4 of set
>3 some of u r getting effective annual yield as 12.36%
>i.e answer (e) ??? how????
PV=-1050, FV=1000, PMT=140/2=70, N=7*2=14,
CPT I/Y=6.44*2=12.89% YTM. All I wanted was 12.89 as your answer, ignore the current yield stuff.

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