A bond that appreciates 4% per year will be worth $146 in five years. find the current value.
1 answer:
Answer:
$120
Step-by-step explanation:
Let the initial value of bond be $X
The future value of any bond is calculated by formula
FV= PV(1+r)^n
where
- FV is future value of bond
- PV is present value of bond
- r is the rate that at which value of bond appreciate
- n is the number of years of maturity
In the problem given
FV= $146
r = 4% = 0.04 (dividing 4 by 100 we get 0.04)
n = 5
substituting these value in formula
PV =$X = $120
Hence current value of bond is $120.
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Answer:
D. a = 60 and b = 58.8
Step-by-step explanation:
Z-score:
In a set with mean and standard deviation
, the z-score of a measure X is given by:
The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the p-value, we get the probability that the value of the measure is greater than X.
Z-score for data point a is 0.
This means that a is the mean, that is, a = 60.
The z-score for data point b is -0.4.
This means that b must be a value below the mean, that is, a value below 60.
The option that satisfies a = 60 and b < 60 is option D, which is the answer.