1.Jack and Jill take out a home mortgage loan for $150 000 over 20 years at an interest rate of 6%, with monthly payments being made at the end of each month.

a)Calculate the amount of each monthly repayment.

b)After 10 years Jill receives a lump sum payout of $30 000 after being made redundant from her university position. She decides to pay this off the principal of the loan. She also decides to shorten the term of the loan to just 5 more years. What will the size of the new repayment be?

1.Suzan took a home loan of $400,000 to be repaid over 20 years by monthly installments from BSP at an Ordinary annuity. The nominal rate on this loan for the first 2 years would be 5% annually after which it will increase to 6% annually.

a)Calculate the monthly installment for the first 2 years.

b)Calculate the loan balance owing, at the end of the 2^nd year.

c)Calculate monthly installments after 2 years.

d)Calculate the difference in monthly payment from a change in interest rate from 5% to 6%.

e)If the installment remained unchanged, how much longer would it take to pay back the loan?

2.Construct an amortization schedule of a loan of $10,000 to be repaid over 10 years with a 10- ordinary annuity payment at effective rate of interest of 10% per year.

3.Construct a sinking fund schedule for the loan of $15,000 to be repaid over 5 years with a 10- ordinary annuity payment at effective rate of interest of 8% per year.

4.What is the price of a 20-year, zero-coupon bond with a 5.1% yield and $1,000 face value?

5.What is the price of a 3-year Eurobond with 5% annual coupons, a face value of $1,000, and the following spot rates: r1 = 4.5%, r2 = 5.5%, and r3 = 6%?

6.Vision Systems bonds have a face value of $500 000, a coupon of 7.75% and 7 years to maturity. Coupons are paid semi-annually. If your required return is 11% p.a., what is the price of this bond?

7.A bond with 5 years to maturity has a coupon of 6% p.a. paid quarterly. The face value is $100 000. If your required return is 8%, what is the value of the bond?

8.Suppose ABC Ltd issues bonds with a 10-year maturity, at $1,000 par value, 10% coupon rate, and semiannual interest payments. Suppose that, 2 years after the initial offering, the going interest rate had risen to 12%. At what price would the bonds sell?

6.Find the price of a $1,000 face value 5-year bond with redemption value of $1,080 and coupon rate of 12.00% payable semiannually. The bond is bought to yield 6.50% convertible semiannually. Show the bond amortization schedule.

9.Calculate the value of a $1000 par, 5% coupon, 5 year maturity bond. Given the following spot rates for the next 5 years:

10.Suppose that a bond paying a 10% coupon rate, with an annual coupon of $100, is purchased three years before maturity to yield 8% compounded semiannually. The purchase price that provides this yield to maturity is $1052.42. Make a complete bond premium amortization.