Certificate of Deposit

Posts Tagged ‘mortgage’

Question: How do you Price a Certificate Of Deposit: see details below?

A UK, CD has a quoted current yield y = 10% and a face value of £1m. It now has 60 days to maturity but when it was issued it had an original maturity of 120 days and a quoted yield of y = 12% p.a. (Day count convention is actual/365).

Calculate :
(a.) the current market price (P) of the CD.
(b.) check that at this price you will earn 10% over the remaining life of the CD.

Answer: Not a very realistic question

I think your teacher has the decimal point in the wrong place … a 60d CD would have a yield of 1% (if you are lucky )

Assuming zero inflation (which we have to, since you don’t quote a figure .. although you do say UK, so I COULD look it up .. but I leave that to you … why does it matter ???? well let’s assume the CD is in Zimbabwean Dollars [which were suspended indefinitely on 12 April 2009, due to hyperinflation] ) …

When it matures you will get face value (£1m) plus the original yield.

Amount you will get is thus £1m + 12% * (120/365) [this assumes that ALL the interest is paid at maturity and NOT accumulated on a daily basis]

So if the ‘yield’ is now 10% p.a. with 60 days to go, then this must mean that the actual payout (above) is equal to what you paid + 10%* (60/365)

(I assume you can use a calculator to work this out ?)

Wealth Accumulation with FREEDOMFLEX®

Question: Cancelled holiday – agent wants full price paid?

Last month my family and I were supposed to go on holiday to Croatia (we live in Slovakia) and stay in a small bed and breakfast. My wife paid a deposit for the holiday through a Slovak agent but two of my children became ill the day before we were supposed to drive so we cancelled. She got a doctor’s certificate to show they were ill. While we were disappointed we accept that we will lose the deposit but today we received a bill for the full amount and threat of legal action if we do not pay. We didn’t sign any contract with the agent, nor did we receive any legal stipulation about this. Do we have to pay full price for an internet booked holiday which we didn’t attend?

Answer: If you do not have a contract with the agent, you do not have to pay anything. Legal action can be based only on a contract, and there is none. Frankly speaking, the agent could be sued for charging you the deposit without a contract.

Money Management & Personal Finance : What Is a CD Bank?

Question: Help me with my math homework please?

please answer these questiosn for me: (1) Ashley’s phone bil went from $32.25 to $18.70 what was the percent of decrease? (2) Joe took out a 5-year loan for $14,7000 to buy a new car. He has to pay 4.9% simple interest on the loan. How much interest will joe have to pay after 5 years? (3) Ben is buying a stereo that costs $899. if the sales tax rate is 4.5%, how much tax will he have to pay on the stereo? (4) Sara earns 5% simple interest on her $2,500 Certificate Of Deposit. How much simple interest will Sara earn in 3 years? (5) Todd went out for lunch and ordered the taco dinner for $7.95 and a soda for $1.50 The total cost included a 6% tax rate. Todd left a tip that was 20% of the total cost. How much did Todd leave for a tip? (6) Karl’s bowling score went from 174 to 205. What was the percent of increase? please help me with these! theres more questions, i already asked in a previous question, if u can check them out. please do it. thanks!

(8th grades)

Answer: 1. To find the percent of decrease you have to first find how much it decreased by:

32.25 – 18.70 = 13.55

Then to find the percent of decrease you have to divide 13.55 by 32.25:

13.55/32.25 = approx. 0.42 (the percent of decrease is 0.42, which is 42%)

2. To find out how much Joe has to pay after 5 years, you have to take it one year at a time (I assumed by 14,7000 you meant 14,700. If not I’m sorry, but you can still hopefully figure it out):

1st year: Joe will have to pay $14700 + 4.9% of that:

14,700*.049 = 720.3, so Joe has to pay 14,7000 + 720.3 = $15,420.3

2nd year: Joe will have to pay $15,420.3 + 4.9% of that:

15,420.3*.049 = 755.59, so Joe has to pay 15,420.3 + 755.59 = $16,175.89

3rd year: Joe will have to pay $16,175.89 + 4.9% of that:

16,175.89*.049 = 792.62, so Joe has to pay 16,175.89 + 792.62 = $16,968.51.

4th year: Joe will have to pay 16,968.51 + 4.9% of that:

16,968.51*.049 = 831.46, so Joe has to pay 16,968.51 + 831.46 = $17,799.97

5th year: Joe will have to pay 17,799.97 + 4.9% of that:

17,799.97*.049 = 872.20, so Joe has to pay 17,799.97 + 872.20 = $18,672.17

Whew! So after all that, we know that he started out with a $14,700 loan, and he has to pay back $18,672.17 after 5 years. To answer the question, we need to find out how much total interest he had to pay, so:

18,672.71 – 14,700 = $3,972.71 (that’s your answer)

3. Ben has to pay $899 + 4.5% of that:

899*.045 = $40.46, so that’s how much tax he has to pay (that’s the answer)

4. Once again, we have to take it one year at a time:

1st year: Sara has $2,500 + 5% of that.

2500*.05 = 125. So Sara has 2500 + 125 = $2,625

2nd year: Sara has $2,625 + 5% of that.

2625*.05 = 131.25, so Sara has 2625 + 131.25 = $2,756.25

3rd year: Sara has $2,756.25 + 5% of that.

2756.25*.05 = 137.81, so Sara has 2756.25 + 137.81 = $2,894.06

So at the beginning, Sara has $2,500. After 3 yrs, she has $2,894.06. So she earned $2894.06 – $2500 = $394.06 (that’s your answer)

5. First we have to find the total cost:

$7.95 + $1.50 = $9.45

Then, the sales tax was 6%, so he actually had to pay $9.45 + 6% of that.

9.45*.06 = 0.57, so he had to pay $9.45 + $0.57 = $10.02

So the question asked how much Todd left for a tip. He left 20% of the total ($10.02) as a tip.

10.02*.20 = 2.00 ($2 is your answer)

6. To find the percent increase you have to first figure out the difference:

205 – 174 = 31. To find the percent increase you divide 31 by 174 = 0.18. So it had an 18% increase.

hope this helped!

Financing Your Franchise Sba Loans