2017-18 - Resit with calculations.pdf

Uploaded by MR. P 3816 at 2019-05-26

Calculations for Q9;51&52 are missing I couldn't do them. If you know how please show me in the comments :) ENJOY :)

can someone explain please
A change in the expected inflation will affect both the demand and the supply curve. It will affect the demand curve because when the expected inflation rises, investors will demand a higher interest rate to cover their lost. Thus, demand for bonds fall, same for bond's price and the interest rate will increase. --> Leads to a left shift of the deand curve. And vis versa, if the expected inflation fall, then demand for bonds will rise, price will also rise and the interest rate will decrease. --> Right shift in the demand curve For supply now, an increqse in the expected inflation will cause the bond price to fall and the interest rate to increase. --> Right shift in the supply curve. And vis versa Hope, it is a little bit clearer now :)
thank s al ot
I think you should use the PV formula : (1000/1,1) + (3000/1,1^2) + .... = 14 807
I get the same value but according to my understanding of the question, isn't it the future value we want both our project to be ? So don't we have to discount this value (according to strategy 2 --> 14807/(1.1^5) in order to get the value we want to put in the saving account?
Beau gosse
Does someone know how to solve these2?
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Because E and D are both 1 and in the formula it says E/(E+D), so since E is 1 and E+D is 2, than it gives you 0.5
So a stock is in the money, even if the premium is not yet paid off? We paid 15$ initially and now we are in the money only 5 $ ...
why do you have r = 0.625 and not 0.0625 as it is a percentage?
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it does, type it in your calculator
if you do it for every value it does not change much, you just get all the results with just one coma to shift and it's less confusing
how do you solve this?
If you decide to invest in bonds, it is more riskier for you, therefore you want a higher yield for your return. This risk is the credit risk
where does -350 go???
If you pass the 2nd "-350" on the other side of the equality, it cancels out
can someone explain the calculation of question 51 (cant highlight is for some reason)
already answered down
I know it is correct, but why do we have to multiply the growing annuity by 1+r^n again?
Because we calculated the present value , but we want to get the future value, so we multiply 1+r^n again...
How do you get the -1?
Cross multiplication
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Method for question 51?
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Mr Porter, why do you multiply the 290 by 1.05 because the perpetuity formula is just c/(r-g) right?
Have a look at „terminal values“. It‘s because of the fact that it‘s long term growth.
Which chapter is that ?
its just turning the annuity formula around. in chapter 4 you have a loan/mortage formula thats this one but simplyfied
Does somebody have the calculation for 42.
Everything is just under :)
you don't really need calculations, if you know that 50% is the mean, and that the standard deviation is how much it fluctuates from the mean, then you can just see that it changes by 25% for both 30 and 15, and so it must be it.
it should be (1.06/1.08)^4. if you do that you should get 162,095 :)
Yes, my bad :/
Can someone explain?
Have a look at the 2nd lecture, where he talks about the Fisher Effect etc.
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How do you do question 9?????
Hey. There are two ways of approacing this. First way (which makes maybe mroe sense from just reading the exercise): Calculate the value of the 5 cash flows in strategy 1 in year 6 (26231€). Now for the second strategy, we want to know what we need to invest now only one time to have the same amount in year 6. Therefore, we can simply compound x --> X*1,1^6=26231. Solve for X and you get the answer. Alternatively, which is the smarter way of doing it is simply discounting all cash flows in strategy 1 to the present value, which let's you skip a step.
B is the correct answer. You want to calculate the difference between the 2 future values which gives you something around 91.
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Option 1: 80000*(1.04)^5 = 97332.23 Option 2: 80000*(1.05)^4 = 97240.5 97332.23 - 97240.5 = 91.73
Thanks man