Question: Problem 1: Amortized loan (4 points) A 5-year $10,000 loan is charged a 5% interest rate. Please compute the following two numbers for two payment
Problem 1: Amortized loan (4 points) A 5-year $10,000 loan is charged a 5% interest rate. Please compute the following two numbers for two payment structures a) fixed principal; b) fixed total payment [Note: please DO NOT make an amortization table to answer this question.] 1) Remaining balance after 2 payments 2) How much total interest is still due at this time (i.e. after 2 annual payments) Problem 2: Bond prices and bond yields (2 points) What is the relationship between the price of a bond and its YTM? [Please do not give the definition of YTM. b) Please compare current yield with YTM for premium and discount bonds. Fill the blanks with >, = or
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