Julie Orzabal deposits $5,000 in a savings account offering 5.125 percent compounded daily. Assuming she makes no further deposits, what will be the balance in her account after 5 years?
2. Write the equation expressing the present value (or price) of a bond that has a 10 percent coupon (annual payments), a 5-year maturity, and a principal of $1,000 if yields on similar securities are 8 percent. Compute the price using a calculator.
3. Find the price of a corporate bond maturing in 5 years that has a 5 percent coupon (annual payments), a $1,000 face value, and an AA rating. A local newspaper's financial section reports that the yields on 5-year bonds are AAA, 6 percent; AA, 7 percent; and A, 8 percent.