Question: ( a ) An investment is worth ( 2 0 0 ) after 6 months under the annual interest rate ( 4

(a) An investment is worth \(200\) after 6 months under the annual interest rate \(4\%\) compounded quarterly. What was the initial investment amount? (4 marks)
(b) An investment of \(800\) is made into an account paying \(6\%\) monthly interest. How long will it take for its value to grow to at least \(900\)?(4 marks)
(c) A hedge fund claims that they can guarantee \(1\%\) monthly rate of return. Assuming compounding effect, what will be the equivalent annual rate of return? (5 marks)
(d)(i) How is logarithmic return on an investment calculated?
(ii) Suppose that the logarithmic return over 3 months on investment subject to continuous compounding is \(3\%\). Find the interest rate. (6 marks)
(e) A second-hand car worth \(1500\) is to be paid off in 2 equal payments at the end of each year. If the loan interest rate is \(5\%\) compounded annually, calculate the value of the annual payments? (6 marks)
( a ) An investment is worth \ ( 2 0 0 \ ) after

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!