Questions from Business Mathematics

Q: What price should be paid for a $5000 face value strip

What price should be paid for a $5000 face value strip bond with 19.5 years remaining to maturity if it is to yield the buyer 6.1% compounded semiannually?

Q: Consider a $10,000 face value Government of Canada strip

Consider a $10,000 face value Government of Canada strip bond from the issue in Table 9.2 that matures on December 1, 2033. Assume the yield does not change as years go by. 1. What will be the bond’s...

Q: Consider a $5000 face value Province of Saskatchewan strip bond that

Consider a $5000 face value Province of Saskatchewan strip bond that matures on March 5, 2029. If the yield does not change as years go by, what will be the bond’s value on: 1. March 5, 2019? 2. March...

Q: Mrs. Janzen wishes to purchase some 13-year-maturity

Mrs. Janzen wishes to purchase some 13-year-maturity strip bonds with the $12,830 in cash she now has in her RRSP. If these strip bonds are currently priced to yield 5.25% compounded semiannually, how...

Q: Mr. Dickson purchased a seven-year, $30,

Mr. Dickson purchased a seven-year, $30,000 compound interest GIC with funds in his RRSP. If the interest rate on the GIC is 2.25% compounded semiannually, what is the GIC’s maturity value?

Q: If the current discount rate on 15-year strip bonds is

If the current discount rate on 15-year strip bonds is 4.75% compounded semiannually, how many $1000 face value strips can be purchased with $10,000?

Q: For a given term of a compound interest GIC, the nominal

For a given term of a compound interest GIC, the nominal interest rate with annual compounding is typically 0.125% higher than the rate with semiannual compounding and 0.25% higher than the rate with...

Q: The late 1970s and early 1980s were years of historically high rates

The late 1970s and early 1980s were years of historically high rates of inflation in Canada. For the years 1978, 1979, 1980, 1981, and 1982 the rates of inflation were 8.8%, 9.2%, 10.9%, 12.6%, and 10...

Q: A pharmaceutical company had sales of $28,600,000

A pharmaceutical company had sales of $28,600,000 in the year just completed. Sales are expected to decline by 4% per year for the next three years until new drugs, now under development, receive regu...

Q: Sam is paid $34.50 per hour as a power

Sam is paid $34.50 per hour as a power plant engineer. He is paid 1.5 times the regular rate for all time exceeding 8 hours in a day or 40 hours in a week. Statutory holidays worked are paid at double...