# 2017-18 - Resit with calculations.pdf

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

+6
633
17
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 :)
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?
Does someone know how to solve these2?
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
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...
Cross multiplication
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