FIN200 – Principles of Finance: Assignment 1 Name Institution FIN200 – Principles of Finance: Assignment 1 Question1: Long-term (Non-bank) Financial Institution Non-bank financial institutions often include entities such as investment companies local trusts and rural credit cooperatives. Several the long-term non-bank financial institutions extend their household savings to the non-state-owned industry. Research indicates that the size of loans given by financial institutions such as banks indicates a positive effect on local developments both economically and statistically. On the other hand non-bank organizations while channeling most of their finances to the non-state-owned industry does not contribute to significant local growth. While banking institutions celebrate a better share of borrowers because of their larger geographical reach and fewer limitations in attracting deposits non-bank financial organizations have a limited choice because of the smaller nature. An ideal sector for long-term finance complies with four core principles. Firstly the financial structure should direct most valuable because the principle of Time Value of Money (TVM) states that money available at the current moment is worth more than a similar amount offered in the future because of the potential to earn. Question 11 a). PV when annual discounting is applied PV = 1000*[1/(1+i)n] PV=1000*[1/(1+0.09)10] PV= 422.41 b). PV when semi-annual discount is applied PV = 1000*[1/(1+0.09)20] PV = 178.43 Question 12 Current cash price = PMT*[1-(1+r)-n/r) Current cash price = 2500*[1-(1+0.08)5/0.08] Current cash price = 156 050 Question 13 Amount paid for the bond = 9/(1+0.11) + 9/(1+0.11)2 + 9+100/(1+0.11)3 = 8.11+7.3+79.7 = 95.11 Question 14 a). If the yield to maturity falls to 6.5% the market price will be as follows: Market price = 7.5/(1+0.065)+7.5(1+0.065)2+7.5(1+0.065)3+7.5(1+0.065)4+7.5(1+0.065)5+7.5(1+0.065)6 Market price = 7.04+6.62+6.21+5.83+5.47+5.14 = 36.31 b). If yield to maturity rise to 8.5% the market price is: Market price = 7.5/(1+0.085)+7.5(1+0.085)2+7.5(1+0.085)3+7.5(1+0.085)4+7.5(1+0.085)5+7.5(1+0.085)6 Market price = 6.91+6.37+5.87+5.41+4.99+4.6 = 34.15 [...]
I am taking an introduction to finance class. You need to answers the questions from this assignment that is uploaded. The number of words is indicated under each questions. So around 5 pages. I would need this assignment in 24-30 HOURS please !!!