Annual percentage rate and effective annual rate

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Reference no: EM131994190

1. Distinguish between annual percentage rate and effective annual rate and how each is used in financial decision making.

2. calculate the price change for a 1-percent decrease in market yield for the following bond: par = $1000; coupon rate = 6 percent, paid semi-annually; market yield = 6 percent; term to maturity = 10 years

3. A stock had returns of 15 percent, 8 percent, 12 percent, -15 percent, and -4 percent for the past five years. Based on these returns, what is the approximate probability that this stock will return at least 20 percent in any one given year?

Reference no: EM131994190

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