Answer:
2 cents
Explanation:
The spot price = $0.7000 = 70 cents, The forward rate = $0.6950 = 69.5 cents and the call option with striking price = $0.6800 = 68.00 cents
The annualized six month rate = 3 1/2 % = 3.5 %, therefore the rate = r/n, where n is the number of period per year = 2. Therefore r/n = 3.5% / 2 = 0.035 / 2 = 0.0175
The minimum price = Maximum (spot price - striking price, (forward rate - striking price) / (1 + 0.0175), 0) = Maximum(70 - 68, (69.5 - 68)/ 0.0175, 0)
Minimum price = Maximum (2 , 1.47, 0) = 2 cents
Answer:
The price of the bond is closest $101.36
Explanation:
It is noteworthy that a rational investor pays for a bond today the cash flows derivable from the bonds in future discounted to today's terms.
The future cash flows comprise of the yearly coupon interest of $5.5(5.5% *$100) for 3 years as well as the repayment of the principal $100 at the end of year 3.
To bring the cash inflows today's term, we multiply them them by the discounting factor 1/(1+r)^N , where is the yield to maturity of 5% and N is the relevant the cash flow is received.
The discounting is done in attached spreadsheet leading $ 101.36 present value today.
This is mainly opinionated, and since I'm young I may be wrong.
I say it's good to motivate them because then they will do a better job at their task and will make you seem like a good boss/person, especially if it's a decent pay that will keep them being able to live. With the motivation, they might even remember more things (Such as: If you work at a gas station, you remember to upsell people when a deal is going on, whereas unmotivated people forget or just don't want to do it and be lazy). It's the same effect of giving a kid a piece of candy for being good, doing chores, or getting a harder question right.
