7/23/2019 EOC Odd-numbered Problem Solutions Chapter 6

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Answers to Odd-numbered end of chapter problems - Chapter 6

1. a. The Ask price is $10,000 x 84.8516% = $8,485.160  b. The Bid price is $10,000 x 100.3750% = $10,037.500

3. a. Ju! 18, "013 # Auus# 15, "016 is 3.07&45"05 !ears. As, #he Asked price is &7.888%. Thus,

  &7.888% = 100%' (1 ) Asked !ied'"*2x3.07945205 

+i- r /Asked !ied, e e# 0.6&%

  b. Ju! 18, "013 # 2eber 15, "0"7 is 14.334"4658 !ears. Thus,

   b  = 100%' (1 ) 3."&&"%'"*"x14.334"4658 = 66.55&%

5. a. Accrued i-#eres# er #he 1" da!s is cacua#ed as  (".1"5%'"* x 1"'184 = 0.06&"&35%

#he ace aue #he b-d, r $6.&"&35 per $10,000 ace aue b-d.

  b. ea- price ) Accrued i-#eres# = ir#! price  &8."50% ) 0.06&"&35% = &8.31&"&35% #he ace aue #he b-d, r $&,831.&"&35 per $10,000 ace aue b-d.

7. a. The i-a#i-ad9us#ed pri-cipa a# #he e-d #he irs# six -#hs Ju-e 30, "017, is u-d b! u#ip!i- #herii-a par aue ($100,000* b! #he seia--ua i-a#i- ra#e. Thus, is ad9us#ed upard b! 1."5 perce-# (e..,$100,000 x 1.0"5*, r # $10",500. Therere, #he irs# cup- pa!e-#, paid - Ju-e 30, "017, is $",306."5($10",500 x "."5%*.

 b. The i-a#i- ad9us#ed pri-cipa a# #he bei--i- #he sec-d six -#hs is $10",500.

c. The pri-cipa au-# used # de#eri-e #he sec-d cup- pa!e-# is ad9us#ed upard b! 0.5 perce-# (e..,$10",500 x 1.005*, r # $103,01".5. The cup- pa!e-# # #he i-es#r r #he sec-d six -#h perid is #hei-a#i-ad9us#ed pri-cipa - #his cup- pa!e-# da#e ($103,01".5* #ies #he seia--ua cup- ra#e ("."5 perce-#*. :r - eceber 31, "017, #he i-es#r receies a cup- pa!e-# $",317.78 ($103,01".5 x "."5%*.

&. a. ; !ur ari-a #ax ra#e is "8 perce-#, #he a#er#ax r e<uiae-# #ax exep# !ied - #he #axabe b-d is6.75%'(1 ."8* = &.375%

 b. ; !ur ari-a #ax ra#e is "1 perce-#, #he a#er#ax r e<uiae-# #ax exep# !ied - #he #axabe b-d is6.75%'(1 ."1* = 8.554%

11. Ju! 18, "013 # :c#ber 1, "044 is & !ears 75 da!s, r &."0547&45 !ears. Thus,

  103.576% = (5.00%'"* >1(1'(1 ) bid !ied'"*"(&."0547&45**?'bid !ied'"@ ) 100%'(1 ) bid !ied'"*"(&."0547&45* 

+i- r bid !ied, e e# 4.5"%

7/23/2019 EOC Odd-numbered Problem Solutions Chapter 6

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13. a. The csi- price da- +achs ".375% b-ds - Ju! 16, "013 as &8.878% #he ace aue #he b-d.

  b. The +C b-d ra#i- - Des Ear 1.500 perce-# cup- b-ds a#uri- i- "018 - Ju! 16, "013 as A).

  c. The csi- price Fra- +#a-e! 5.&50 perce-# b-ds - Ju! 15, "013 as 11".083% 0.373% =111.710% #he ace aue #he b-d.

15. Bere #he ra#i- cha-e b = ($1,000(6.5%*'"* >1(1'(1 ) 0.07"'"*"(15**?'0.07"'"@ ) 1,000'(1 ) 0.07"'"*"(15* 

+i- r  b, e e# $&36.4"68335.:- a i-a-cia cacua#r CFT = 3".50, E = 1,000, ; = 7."0'" = 3.60, 2 = 15("* = 30=G C = &36.4"68335

A#er #he ra#i- cha-e b = ($1,000(6.5%*'"* >1(1'(1 ) 0.085'"*"(15**?'0.085'"@ ) 1,000'(1 ) 0.085'"*"(15* 

+i- r  b, e e# $83"."0&8"83.:- a i-a-cia cacua#r CFT = 3".50, E = 1,000, ; = 8.5'" = 4."5, 2 = 15("* = 30=G C = 83"."0&8"83

$ cha-e i-  b = $83"."0&8"83 $&36.4"68335 = $104."17005"% cha-e i-  b = ($83"."0&8"83 $&36.4"68335*'$&36.4"68335 = $104."17005"'$&36.4"68335 = 11.1"&%

 

17. Bere #he ra#i- cha-e b = (1,000(6.75%*'"* >1(1'(1 ) 0.08"'"*"(10**?'0.08"'"@ ) 1,000'(1 ) 0.08"'"*"(10* 

+i- r  b, e e# $&0".336888.:- a i-a-cia cacua#r CFT = 33.75, E = 1,000, ; = 8."0'" = 4.10, 2 = 10("* = "0=G C = &0".336888

A#er #he ra#i- cha-e b = (1,000(6.75%*'"* >1(1'(1 ) 0.071'"*"(10**?'0.071'"@ ) 1,000'(1 ) 0.071'"*"(10* 

+i- r  b, e e# $&75."40443&.:- a i-a-cia cacua#r CFT = 33.75, E = 1,000, ; = 7.1'" = 3.55, 2 = 10("* = "0=G C = &75."40443&

$ cha-e i-  b = $&75."40443& $&0".336888 = $7".&035558% cha-e i-  b = ($&75."40443& $&0".336888*'$ &0".336888 = $7".&035558'$&0".336888 = 8.07&%

1&. a. ; a b-d hder ere # c-er# Hi#- H#es b-ds i-# s#ck, each b-d (r#h $&75.00* cud beexcha-ed r 61."&83 shares s#ck r#h $15.&0. The c-ersi- aue #he b-ds is

$15.&0 x 61."&83 = $&74.50

  b. The b-ds are curre-#! r#h $&75.00 per b-d, hie #heir c-ersi- aue is $&74.5. Thus, #here isir#ua! - diere-ce i- dar aue #he i-es#e-# # #he i-es#r i he r she hds Hi#-Is deb# r i#s c-s#ck e<uiae-#.