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# Thread: Weekly Practice Exam "FM" Problems courtesy of Dr Krzysztof Ostaszewski

2. ## Exercise 21 for October 8, 2005

www.math.ilstu.edu/krzysio/KO-FM-Exercise21.pdf
I hope you will enjoy it.

Yours,
Krzys'

3. ## Exercise 22 for October 15, 2005

www.math.ilstu.edu/krzysio/KO-FM-Exercise22.pdf
I hope you will enjoy it.

Yours,
Krzys'

4. ## Exercise 23 for October 22, 2005

This exercise is not a multiple choice exam-like problem, but instead a slightly longer problem discussing the range of possible yields on a callable bond:
http://www.math.ilstu.edu/krzysio/KO-FM-Exercise23.pdf
I hope you will enjoy it.
Yours,
Krzys' Ostaszewski

5. ## Exercise 24 for October 29, 2005

I am going to speed up postings just before the exam, so that you can get some extra material.
http://www.math.ilstu.edu/krzysio/KO-FM-Exercise24.pdf
I hope you will enjoy it.
Yours,
Krzys' Ostaszewski

6. ## Exercise 25 for November 5, 2005

http://www.math.ilstu.edu/krzysio/KO-FM-Exercise25.pdf
I hope you will enjoy it.
Yours,
Krzys' Ostaszewski

7. Originally Posted by krzysio
http://www.math.ilstu.edu/krzysio/KO-FM-Exercise25.pdf
I hope you will enjoy it.
Yours,
Krzys' Ostaszewski

In the solution it said that the present value of the 2 year bond is

\$95,238.1/1.044 + \$1,904,761.9/1.044^2

Shouldn't the last figure there be

\$2,000,000/1.044^2? Why does it seem to not include the second coupon payment?

8. ## Second coupon payment

Originally Posted by Arnold Kim

In the solution it said that the present value of the 2 year bond is

\$95,238.1/1.044 + \$1,904,761.9/1.044^2

Shouldn't the last figure there be

\$2,000,000/1.044^2? Why does it seem to not include the second coupon payment?
Dear Arnold Kim:
Gosh, you must be ready for this test! Yes, you are right. I posted a corrected version now. Thanks for noticing this.
Yours,
Krzys'

9. Question regarding Sample Exercise 11:

Did I make an incorrect assumption of some sort here?
5(X)^n = 8 where X = 1+i
X^n = 8/5

Substitute that into the equation for the accumulated value:
(X^n - 1)/d = 8

and you have:

(8/5 - 1)/d = 8 ---> d=.075

10. ## Correction

Nope. You did a great job, you find a quick and effective solution. Congratulations and thank you for pointing it out. Great work.

Yours,
Krzys' Ostaszewski
author of the Course FM manual at NEAS-seminars.com

Originally Posted by bv12
Question regarding Sample Exercise 11:

Did I make an incorrect assumption of some sort here?
5(X)^n = 8 where X = 1+i
X^n = 8/5

Substitute that into the equation for the accumulated value:
(X^n - 1)/d = 8

and you have:

(8/5 - 1)/d = 8 ---> d=.075