1. Kemal borrows $100000 from his uncle and promises to pay it back over the next 10 years making equal semiannual end of term payments. Calculate the amount of each payments, if interest rate is J2= 9%.
2. You borrow $20000 and agree to pay it off with a single payment of $35000 in 4 years. What annual rate of interest will you be charged?
3. What is the yield to maturity (YTM) on a bond that was purchased for $987.65, has a coupon rate of 8%, makes one payment annually, will mature in 10 years, and has a $1,000 par value?
4. True or False and why: If we assume you invest 50% of your portfolio in each of two stocks that are perfectly negatively correlated, you should expect to realize the risk-free rate of return.