FIN435 • First Midterm — Calculation Solutions

Chapter 6 (9 MCQ calculations) • Chapter 7 (Bond yields short answer, annual coupon bond) • Chapter 8 (3-stock portfolio short answer)

Summary Chapter 6 MCQ Chapter 7 Short Answer Chapter 8 Short Answer

Summary

Chapter 6

Interest Rates / Yield Curve / Fisher / Premiums / Expectations Theory

Format: Multiple Choice (Calculation)

Questions: 9

Solutions: Instant feedback + explanations

Chapter 7

Bond YTM • Current Yield • Capital Gain Yield (Annual coupon bond)

Format: Short Answer (1 problem)

Enter: YTM, Current Yield, Capital Gain Yield

Solutions: Check answer / show key + Excel YTM formula shown

Chapter 8

3-Stock Portfolio Return & Risk

Format: Short Answer (1 problem)

Enter: E[Rp], σp

Solutions: Check answer / show key (detailed σp steps)

Chapter 6 — Calculation Multiple Choice 9 questions

Select one answer. This page shows the correct answer and a short explanation (solutions format).

Chapter 7 — Bond Yield Question (Short Answer) 1 question

Annual coupon bond (1 coupon payment per year). Compute Current Yield, YTM, and Capital Gain Yield. Report answers as percentages (2 decimals).

Formula reminder (annual coupon bond):
Current Yield = Annual Coupon / Price
Capital Gain Yield = YTM − Current Yield
YTM = Current Yield + Capital Gain Yield

Excel (exact YTM, annual coupon):
=RATE(n, AnnualCoupon, -Price, Par)
Example for this problem: =RATE(12,68,-955,1000)

Question (Chapter 7 — Annual Coupon Bond)

An annual coupon bond has par value = $1,000, annual coupon rate = 6.8%, current market price $955, and 12 years to maturity. Compute:

Chapter 8 — 3-Stock Portfolio (Short Answer) 1 question

Compute E[Rp] and σp. Use decimals inside formulas. Report final answers as percentages (2 decimals).

Question (Chapter 8)

AssetWeight (w)E[Ri]σi
Stock A35%10%22%
Stock B40%13%30%
Stock C25%8%16%
Correlations: ρAB = 0.15, ρAC = −0.10, ρBC = 0.35