MA Last quizzes

bonds- formula to calculate amount of principal in a loan

Sold at discount

P<C

Discount =C-P

Sold at premium

P>C

Premium = P-C

How to calculate book value for bonds

PRICE IS PRESENT VALUE OF FUTURE CASH FLOWS

Callable bonds what price is the most advantageous to assume a yield %

The lowest price because it is out worst case scenario

If there is no call premium what time does the smallest yield occurs where

If bought at premium- earliest callable date

If bought at discount - latest callable date

Forward rate formula

When accumulating with spot rates what interest rate do you use

The one in the last period (or period you are accumulating to)

How to calculate surplus

Assets - liabilities

Absolute/ exact matching

MacD definition

MacD how to calculate

Modified duration

Zero coupon bond what does MacD and ModD ewual

Years to maturity

ModD= years to maturity times v

Calculating MacD with an annuity

ADD PV OF MATURITY

If not annual- change n and interest rate according to the period

If annuity due → arithmetic series is n-1 periods and use annuity due for bottom

Macaulay convexity formula

Modified convexity formula

MacC convexity with zero coupon bond

MacC equals n²

PV weighted average MacD and MacC