BUSI 223 Exercise 3 solutions complete answers
1. It is important to know what the standard rates are. Go to https://www.moneycafe.com/cmt-rate-1-year-constant-maturity-treasury/ report the rates for the 1-Year Treasury. Go to https://www.bankrate.com/banking/cds/cd-rates/ and report the best CD rate. Go to google.com, then click finance and report the Dow Jones and S&P 500.
2. Go to Google.com, click on Finance, and enter Coke in the search box.
· Step (a): Record the last closing price (for example, previous close - yesterday's closing price)
· Step (b): Record the change (current price minus previous close) for the day (up or down and how many dollars & cents)
· Step (c): Divide your change for the day (from b above) by the last closing price (from step a above). The result is typically something like 0.1234 or 0.0123. Convert the decimal to a percent (such as 12.34% or 1.23%).
Example:
· Step (a): Last closing price (previous close) of Coke = 66.26
· Step (b): Change for the day (up or down) = -$.05
· Step (c): Divide (b) by (a) = -$.05/$66.26 = 0.00075 = -.08% <-- R.O.I. in percent.
· Find the yield to maturity on the following bond.
3. I can buy a $1,000 bond for $950. I get $50 a year and it matures in 20 years. Find the YTM (interest rate). Remember this is a time value of money problem, so you need to use your financial calculator or Excel and include inputs.
*Put your answers to all these problems into the comment section of the assignment link.
