1. You paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $10,250 at the end of the 5th year. What is the expected rate of return on this investment?
a. 7.93% b. 3.16% c. 10.08% d. 8.39%
2. What's the present value of $1,025 discounted back 5 years if the appropriate interest rate is 6%, compounded monthly?
a. $767.51 b. $759.91 c. $721.91 d. $691.51 e. $729.51
3. The bank purchased $50 million in 360-day negotiable CDs. The total negotiable CDs increased from $132 million in quarter 0 to $149 million in quarter 1. Explain, why.