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1) Your credit card company quotes a lending rate of 15
1) Your credit card company quotes a lending rate of 15.4% APR. How much is the periodic rate (in percentage points) if the company compounds monthly?
2. Suppose you purchased a stock a year ago. Today, you receive a dividend of $16 and you sell the stock for $99. If your return was 11%, at what price did you buy the stock?
3. The bonds issued by United Corp. bear a coupon of 6 percent, payable semiannually. The bond matures in 20 years and has a $1,000 face value. Currently, the bond sells at $955. The yield to maturity (YTM) is _____%.
Expert Solution
1)
Periodic rate:
= 15.4%/12
= 1.2833%
Hence, period rate is 1.2833% or 128 basis points
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