Question 1 Determine the slope for line 2x+12y-6=0 2x+12y=6 12y=-2x+6 y=-2x/12+6/12 y=-x/6+1/2 ∴m=-1/6 Find the slope of the required line‚ which is "m" (-1/6)("m" )=-1 (m)=6 Now‚ substitute m=6 into equation y=mx+c ‚i.e. y=6x+c. This line passed through point (2‚4). So‚ we substitute x=2‚y=4 into y=6x+c. 4=6(2)+c 4-12=c c=-8 ∴ The equation of the straight line that we are looking for is y=6x-8
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Topic 1: Principles in Finance and Valuation Learning Outcomes what is finance? principles in finance application: valuation Topic 1: Principles in Finance and Valuation M K Lai Page 2 What is Finance? N = the date when you are called to answer to God face-to-face now 1 N-1 2 N N-1 … initial wealth income income income income income consumption consumption consumption consumption consumption consumption How to allocate your initial wealth and future income to consumption over time
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1. How much will $1000 deposit in savings account earning a compound annual interest rate of 6% be worth at the end of the following number years? a) 3 years $1‚191 b) 5 years $1‚338 c) 10 years $1‚791 2. If you require a 9% return on your investment which would you prefer? a) $5‚000 today PV = $5‚000 b) $15‚000 five years from today PV = $9‚748.50 c) $1‚000 per year for 15 years PV = $8061 Select option b
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through diversification‚ though it can be hedged against. The risk that a major natural disaster will cause a decline in the market as a whole is an example of market risk. Other sources of market risk include recessions‚ political turmoil‚ changes in interest rates and terrorist attacks. Diversifiable risk The risk of price change due to the unique circumstances of a specific security‚ as opposed to the overall market. This risk can be virtually eliminated from a portfolio through diversification also
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grandfather‚ which the father plans to invest in a bank paying 8 percent interest compound annually‚ to help meet the cost of the daughter’s education. However‚ the remaining cost will be met by money‚ the father will deposit in the savings account. He will make 6 equal deposits to the account‚ one deposit in each year from now until his daughter starts college. These deposits will begin today and will earn 8 percent interest‚ compounded annually. a) What will be the present value of the
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stock for Rs.19 per share. On December 31‚ 2008‚ he sold the stock for Rs.31.50 per share. What is his annual rate of return? Interpolate to find the exact answer. (4) (Q4. Mr. Strong) 2. b. If investors are to earn a 6 percent real interest rate‚ what nominal interest rate must they earn if the inflation rate is 8 percent? (2) (Q10) 2. c. Calculate the EAR for the following cases: (2) i. APR 24%: Compounding period 1 month ii. APR 12%: Compounding period 3 months 2. d. Calculate the APR
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TECHNIQUES READING FOR WEEK 1 SIMPLE INTEREST & SIMPLE DISCOUNT INTRODUCTION TO TECHNIQUES The first half of the lectures develop the basic techniques required to solve financial problems: - Simple interest and simple discount which are usually only used for transactions of a short duration. The price paid for securities purchased in the money market is usually calculated using a simple interest formula although simple discount is sometimes used. - Compound interest involving single payments and
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There are five components of a nominal/quoted interest rate: r=r*+IP+DRP+LP+MRP. The first component‚ r*‚ is the “real risk free rate.” This component compensates the lender for opportunity cost. To specify opportunity cost‚ it can be known as other opportunities the lender could have in producing growth of their investment. Since no one really knows what the real risk free rate is‚ one would calculate r* by taking the difference of current inflation from a 30-day government treasury bill (current)
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c. $8‚081.55 d. $8‚181.55 2. What will a deposit of $4‚500 at 7% annual interest be worth if left in the bank for nine years? a. $8‚273.25 b. $8‚385.78 c. $8‚279.23 d. $7‚723.25 3. What will a deposit of $4‚500 at 12% compounded monthly be worth at the end of 10 years? a. $14‚351.80 b. $14‚851.80 c. $13‚997.40 d. $14‚304.80 4. How much will $1‚000 deposited in a savings account earning an annual interest rate of 6 percent be worth at the end of 5 years? a. $1‚338 b. $1‚348 c
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Multiple-choice questions 1 Bennet invested $15 000 for 3 years. He earned 6.5% per annum interest‚ compounding annually. The value of his investment at the end of three years‚ to the nearest dollar‚ is: A $15 004 B $18 119 C $18 220 D $17 925 E $35 850 2 Chen purchased a second-hand car for $20 250. She paid a deposit of $3000 and made repayments of $600 per month over 3 years. The total amount of interest Chen paid is: A $350 B $2350 C $4350 D $6350 E $7250 3 Suppose that
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