8.) If the settlement date falls on issue date or on a coupon date, which of the following is least accurate? O Accrued Interest > 0 O Dirty Price = Clean Price O Accrued Interest = 0
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- 2. Which of the following may not be equal to the contract rate of interest? a. stated rateb. nominal ratec. face rated. effective ratea) DEFINE the following terminologies:i. Present valueii. Future valueiii. Periodiv. Interest rate5. Solve for the following assuming that uncovered interest rate parity holds. a. is = .03, ie -.02 What is %AEse? a. Ese = 2, is=.03, ie -.02 What is E? b. E° = 4, is = .03, ie -3.05 What is Ese ?
- "Fisher effect defines the relationship between nominal rates, real rates, infiation, default premium, and maturity premium". Is the above statement TRUE? O A. Yes O B. NoQ)5) One standard assumption for annuities and gradients is A) each payment occurs at the beginning of the period. B) annuities and gradients coincide with the beginning of sequential periods. C) annuities and gradients coincide with the end of preceding periods. D) payment period and compounding period differ. E) payment period and compounding period are the same. and why? Choose correct option with explanation.The elasticity of the change of the price of debt toward the change in interest rate is the absolute value of (and then divided by(1+r)) a. Convexity b. Maturity c. Duration d. Immunization
- Which formula is correct for the compound interest calculation? Select one: a. P = F(1+i)^-n b. P = F/(1+in) c. P = F/(1+i/n)A. Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? FV = (1 + I)NN / PV FV = PV / (1 + I)NN FV = PV x (1 + I)NN B. Simple interest? FV = PV + (PV x I x N) FV = PV - (PV x I x N) FV = PV / (PV x I x N) C. Identify whether the following statements about the simple and compound interest methods are true or false. Statement True False After the end of the second year and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest. All other variables held constant, investments paying simple interest have to pay significantly higher interest rates to earn the same amount of interest as an account earning compound…(a) Define effective interest rates and prove that r=| 1+ 1.
- Which of the following condition may indicate that OMR has depreciated to EUR? a. Spot rate of EUR/OMR is equal to future rate of OMR/EUR b. Spot rate of EUR/OMR is less than future rate of EUR/OMR c. None d. Future rate of EUR/OMR is equal to spot rate of OMR/EUR e. Future rate of OMR/EUR is less than Spot rate of OMR/EUR no need to explain ..only give answerWhich of the following is not needed to compute the present value of an investment?a. The length of time between the investment and future receiptb. The interest ratec. The rate of inflationd. The amount of the receipTa. what is the difference between the discount rate used for net present value and the internal rate of return methods?