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Fin Exam Answers

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Pick the correct answer. If answers A through D are not correct or there is inadequate information, pick answer E.

1. Assume that the one-period spot interest rate is 3% and the two-period spot interest rate is 7%. What is the present value of $100 received one year from now?

A. $87.34 B. $93.46 C. $96.12 D. $97.08 E. None of the above.$97.08

2. The present value of $100 received one year from now is $91.27 and the present value of $100 received two years from now is $88.76. What is the two-year spot interest-rate?

A. 6.14% B. 6.18% C. 6.23% D. 6.31% E. None of the above.$84.17

3. Assume that the one-period spot interest rate is 3% and the two-period spot interest rate is 7%. You invest $100 one-year from today. What is the time 2 value?

A. $110.87 B. $111.16 C. $118.81 D. $119.28 E. None of the above.

4. Assume that the three-year spot interest rate is 3% and the four-year spot interest rate is 9%. You are going to receive $120 four years from now. What is the time 3 value?

A. $104.03 B. $104.97 C. $105.19 D. $105.44 E. None of the above.$104.03
$118.81
5. Assume that the one-period spot interest rate is 3% and the two-period spot interest rate is 9%. You purchase a two-year bond with annual coupons of $4 and par value of $100? What is the price of this bond?

A. $89.58 B. $91.42 C. $92.11 D. $92.96 E. None of the above.$91.42

6. Assume that the one-year spot interest rate is 3% and the forward interest-rate for the second year is 5.0505

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