1. On the day Harry was? born, his parents put $ 1300 into an investment account that promises to pay a fixed interest rate of 5 percent per year. How much money will Harry have in this account when he turns 21 ??
2. You have just taken out a 30-year mortgage on your new home for $120,000. This mortgage is to be repaid in 360 equal monthly installments. If the stated (nominal) annual interest rate is 10 percent, what is your approximate payoff balance after 24 payments (after making 24 monthly payments)?
3. The current price of a non-dividend paying asset is $65, the riskless interest rate is 5% p.a. continuously compounded, and the option maturity is five years. What is the lower boundary for the value of a European vanilla put option on this asset with strike price of $80?