INV3702 Exam Pack 2026

INV3702
EXAM PACK

, INV3702 JUNE MEMO RALPH 0838703464




Q1
FV=1000
PV=-850
PMT=30(6%/2x1000)
N=50
I= 3.6578 x2
=7.32% option 3


Q2
TIPS Semi-annual interest payments are determined by multiplying the inflation-adjusted principal
amount by one-half the stated rate of interest on each interest payment date.

Semi-annual inflation = 2.5/2=1.25
Inflation adjusted principal at end of the first six months = (1+0.0.12) x 1000= 101 250

Coupon rate = (4%/2 x 101 250) = 2025 Option 3

Q3
FV= 10 000
PMT = 400
I= 6.8/2 = 3.4
N=30x2 = 60
Compt PV= 11 527 option 4


Q4
Duration = price if yield decline- price if yield rise
= 83.50-80.75 = 5.59 Option 4
2(initial price) x change in yield 2(82) (0.003)

Duration – Used to Measure Interest Rate Risk

Q5
Option 2
A floating rate note (coupon rate = reference rate + quoted margin)
Coupon = I month Libor + 300bps

= 1.5 + 3%= 4.5%


Q6
FV=1000
PV=701.22
PMT=80
N=20
COMPT I=12%