INV3702 - MAY_JUNE 2017 (1).pdf

INV3702 – Memo – May/June 2017 Second Paper Examination

Question Answer Explanation
1 3 N = 25 X 2 = 50
I/Y = ?
PV = -R850
PMT = 0.06 X 1000 = R = R30
FV = R1000
CPT I/Y = 3.66% Semi Annual X 2 = 7.32%
2 3 ($100 000 X 1.0125) (0.04/2) = $2025
3 4 N = 30 X 2 = 60
I/Y = 6.8% / 2 = 3.4%
PV = ?
PMT = 0.08 X R10 000 = R = R400
FV = R10 000
CPT PV = R11 527.33
4 4 Duration = V- - V+ / 2 X Vo X Change in Yield
Duration = 83.50 – 80. X 82.00 X 0.003
Duration = 2..492
Duration = 5.59
5 3 Coupon rate = 1.5 % + 3.00% = 4.5% - Lowest is the floor of 5%

6 1 First Issue

N = 20
I/Y = ?
PV = -R701.22
PMT = 0.08 X 1000 = R80
FV = R1000
CPT I/Y = 12.00%

Second Issue

N=8
I/Y = 12
PV = -R701.22
PMT = ?
FV = R1000
CPT PMT = R59.85