ar wat Name awwan Alsa lai bi ES3083 Problems 14 are multipl

ar wat Name awwan Alsa lai bi ES-3083 Problems 14 are multiple-choice probliems, 30-point each. To obtain the full credit, you munt show the work that leads to the answer l. An inerest fine ef i 5% per year, eon Ca) 1.00% per month (b) 15.2% per year (e) 16.08% per year (d) 16.93% per year 2. You purchase a $10,000 bond with abond rate of6%per year peryal le sem annuallyand sell at face value after 2 years. You pay $9,600 for the bond. Which statement is correer? (a) Semiannual cash flows will be-$9600, $300, $300, $300, $9700 and the bond will earn b) Semiannual cash flows will be-$960o, $300, $300, 5300, 59700 and the bond will eam (c) Semiannual cash flows will be $9600, $300, S300, 5300, $10,300 and the bond will eam d) Semiannual cash fows will be $9600, 5300, 5300, $300, $10,300 and the bond will earn more than 10% less than 10% more than 10% less than 10%

Solution

1) Effective rate of interest = (1+0.15/12)^12-1 = 16.08% Answer: Option [c] 2) Answer: Option [c] The semiannual cash flows are -9600 purchase 300 interest 300 interest 300 interest 300 interest+face value on sale of 10000