1. Phantom Limited borrows $150,000 at an interest rate of 12% per annum compounding monthly, repayable by equal monthly instalments over 30 years. Calculate the principal and interest components of the first repayment.
a. For the first repayment, the principal component is $101.09 and interest component is $1,200.
b. For the first repayment, the principal component is $42.92 and interest component is $1,500.
c. For the first repayment, the principal component is $42.92 and interest component is $1,800.
d. For the first repayment, the principal component is $151.63 and interest component is $1,500.
2. A bond has a 10% coupon rate and a $100 face value. Coupon is paid every quarter, and the bond has 20 years to maturity. If investors require a 15% yield, what is the bond’s value?
a. The bond value is $143.06.
b. The bond value is $70.50.
c. The bond value is $69.80.
d. The bond value is $68.42.