Revision as of 19:18, 19 November 2023 by Admin (Created page with "'''Solution: C''' Let <math>n</math> be the term of the bond in half-years. We know that <math>601=1080 v^n</math> and thus <math>v^n=601 / 1080</math> . Then <math display = "block">a_{\overline{n} |0.05}=\frac{1-v^n}{0.05}=\frac{1-601 / 1080}{0.05}=8.87037</math>. The purchase price of the bond is <math display ="block">40 a_{\overline{n}| 0.05}+1080 v^n=40(8.87037)+610=956.</math> {{soacopyright | 2023 }}")
Exercise
ABy Admin
Nov 19'23
Answer
Solution: C
Let [math]n[/math] be the term of the bond in half-years. We know that [math]601=1080 v^n[/math] and thus [math]v^n=601 / 1080[/math] . Then
[[math]]a_{\overline{n} |0.05}=\frac{1-v^n}{0.05}=\frac{1-601 / 1080}{0.05}=8.87037[[/math]]
. The purchase price of the bond is
[[math]]40 a_{\overline{n}| 0.05}+1080 v^n=40(8.87037)+610=956.[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.