SEEM$2520$ Tutorial $3$

SUN Kangxuan

October $7$th$,2024$

Suppose $$1$ were invested in $1776$ at $3\mathrm{.}3\%$ interest compounded yearly.

Approximately how much would that investment be worth today?

What if the interest rate were $6\mathrm{.}6\%?$

An $8\%$ bond with $18$ years to maturity has a yield of $9\%,$ the coupon is

paid annually and the face value is $$100.$ What is the price of this bond?

A bond has a face value of $$1000,$ a current market price of $$950,$ an annual

interest payment of $$40,$ and will mature in $5$ years. Calculate the Yield to

Maturity $($YTM$)$ of this bond.

Suppose that your expectations regarding the stock price are as follows

Compute the mean and standard deviation of the return on the stock.

The annual return on a stock is normally distributed with a mean of $20\%$

and standard deviation of $30\%.$ What is the probability of its actual return

being between $-40\%$ and $80\%?$