Answer All Questions

Note: $Do$ not attach dollar signs, percent signs, $or$ commas separating $1000sto$ your answers. Keep

your final answers $to$ three $(3)$ decimal places.

The Present Value $of$ a future payment $is$

the future payment $as$ long $as$ interest rates are

positive, because the Present Value

future payments using a factor based $on$ market

interest rates.

Based $on$ the Time Value $of$ Money, a rational individual should $be$ indifferent between $$5,300$ paid $6$ years $in$ the future and

paid today $if$ market interest rate $is6\mathrm{.}25$ percent.

$A$ $$9,080$ payment $tobe$ made $6$ years $in$ the future $is$ equivalent $to$ receiving

today; and $$9,080$ paid today $is$

equivalent $to$

paid $6$ years $in$ the future $if$ market interest rates are $6\mathrm{.}75$ percent.

A key difference between the Yield $to$ Maturity and the Current Yield $is$ that

The Yield $to$ Maturity for $a7-$year discount bond with face value $$8,000$ selling for $$7,072is$

The Yield $to$ Maturity for $a5-$year dicount bond with face value $$100,000$ selling for $$76,400is$

The Effective Annual Rate for $a3-$month $(91-$day$)$ Commercial Paper that pays $1\mathrm{.}112235\%is$

The Effective Annual Rate for $a6-$month $(181-$day$)$ Commercial Paper with Face Value $$10,400$ that sells for $$10,306\mathrm{.}4is$

The rational investor should

a Government $of$ Canada $3-$month $(91-$

day$)$ Treasury bill with Face Value $$107,000$ selling for $$105,609,$ relative $to$ a government $of$ Canada $5-$year marketable bond

that pays $5\mathrm{.}389\%$ annually.

The Yield $to$ Maturity for a one$-$year coupon bond with Face Value $$10,000$ selling for $$10,350$ and paying annual coupons $at$

$7\mathrm{.}9\%is$