Question Details

Explain The Basis For The Present Vale Formula Equation 4 Tell Why Each Term looks the way it does.  If the rate of discount is zero, how does the formula simplify.
2.
What is the relationship between present value and the rate of discount for a given future value? 
4.
What is the relationship between present value, future value, and the interest rate in the case of perpetuity?
5.
What does it mean to amortize a loan?
7.
Why are security prices and interest rates inversely related?
11.
If the rate of discount is 20 percent,
A.	 Would you rather receive $100 today or $120 in one year?
B.	Would you rather receive $205 today or $240 in one year?
C.	Would you rather receive $500 in one year or $610 in two years?
14. Find the yield to maturity of the following securities:
        A.  A security paying $1000 in one year, for which you pay $926 today.
        B.  A security paying $80 one year from now and $1080 two years from now, for which you pay $1050 today.
        C.  A security paying $50 every six months for the next five years (beginning six months from now) plus the return of the face value of $1000 at the end of the five years, for which you pay $1000 today.
 



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