ECON 3076: Money and Financial Markets Spring – 2022 Algoma University Homework # 01 (Due: June 05, 2022) Direction: To

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ECON 3076: Money and Financial Markets
Spring – 2022
Algoma University
Homework # 01
(Due: June 05, 2022)
Direction: To receive full credit, do not leave any part of a question unanswered. Always show
your work. Please write down the formula/e and show the full calculation work step by step to
get the full credit.
1. What is the future value of $500 three years from today if the interest rate is 6 percent?
2. Three years ago Warren put $1,200 in an account paying 2 percent interest. How much is
the account worth today?
3. Four years ago Matt deposited some money into an account. He earned 5 percent on this
account and now has a balance of about $303.88. How much did he deposit into his account
when he opened it?
4. Consider a one-year discount bond that has a present value of $3,000. If the rate of discount
is 5 percent, what is the future value of the bond (the amount the bond pays in one year)?
5. Consider a perpetuity making one payment each year that has a present value of $1,000. If
the rate of discount is 7 percent, what is the annual payment of the bond?
6. Consider a three-year fixed-payment security that has a present value of $1000. If the rate
of discount is 7 percent, what is the payment made at the end of each year?
7. Consider a two-year coupon bond that has a present value of $10,000. If the rate of discount
is 3 percent, and the payment made at the end of each year is $250, what is the principal
amount to be repaid at the end of two years?