Assignment 1 for Unit 2. You have to SHOW your work (show how you get the answers) to get credit. The answers to these problems are given to you on a separate file. Below are the formulas for each type of loan and bonds. Use the respective formula regarding a respective question: for example, on questions regarding a simple loan use the simple loan formula, on questions regarding a fixed payment loan question use the fixed payment loan formula, and so on. You also have to know the formulas for the test. Future Value : F C rate coupon = FV= future value, PV= present value, i= interest rate, N= number of years. . Present Value: (1) N FV PV i = + FV= future value, PV= present value, i= interest rate, N= number of years. Simple loan: (1) N FVPVi =+ FV = future value, i = interest rate, n = number of years Fixed payment loan: n i FV loan ) 1 ( + = FP = fixed payment, i = interest rate, n = number of years n i FP i FP i FP loan ) 1 ( ... ) 1 ( ) 1 ( 2 1 + + + + + + =Coupon bond: P = price of bond, i = interest rate, n = number of years, c = coupon payment, and F = face value of the bond. n i F C i C i C P ) 1 ( ... ) 1 ( ) 1 ( 2 1 + + + + + + + = P = price of bond, C = coupon payment P C yield current = F = face value, C = coupon payment Discount Bond: F C rate coupon = P = price of bond, i = interest rate, n = number of years, F = face value Yield to maturity on a discount bond with less than a year of maturity: n i F P ) 1 ( + = P = price of bond, F = Face value, G = number of days to maturity. Yield on discount basis on a bond with less than a year of maturity: G P P F ytm 365 * - = P = price of bond, F = face value G F P F basis discount on yield 360 * - =Consol bond: P = price of bond, i = interest rate Bring the answers to the following questions to Class simple loan: 1. End of ten years you will pay back $20,000. If I = 6% , how much is the loan amount now. 2. If you borrowed $9900 at i = 10% to pay back at the end of 15 years, how much money do you pay back? 3. You will receive $35,000 at the end of two years. Its present value is $20,000. The yield to maturity equals what? fixed payment loan: 1. i = 9%, loan = $15,000, 5 year loan. The fixed payment =___. 2. The fixed payment = $7000, i. i= 9%, 3 years, loan =___ coupon bond: 1. coupon payment = $100, face value = $6000, i = 5%, 4 years, a) price of bond =___ b) coupon rate =___ c) current yield =____ 2. Coupon rate = 5%, face value = $12,000, i = 7% a) price of bond for a) 1 year bond=___, b) 2 year bond =____ c) 3 year bond =_____ 3. if i increases to 12% , what happens to each of the prices (in a) above. discount bond (zero coupon bond): 1. Face value = $20,000, price = $19,000, 1 year bond, ytm = _ 2. Face value = $20,000, price 19,000, 1 year bond , number of days to maturity = 90 days. a) ytm =_______ b) yield on discount basis =___ 3. Fac ...