ECON 351 Chapter Notes - Chapter 3: Opportunity Cost, Current Yield
Document Summary
Compound interest = p x [1 + i]n = x [1 + 0. 05]2 = ,102. 50. The value at some future time of an investment made today. Future value = p x [1 + i] = x [1 + 0. 050] = . Discounting: pv = fv / [1 x i]n = / [1 x 0. 05]1. The value today of funds that will be received in the future. Debt instruments: simple loans, discount loans, coupon bonds buyer, face value or par the amount to be repaid by the bond issuer [the borrower] at maturity. Student loans: subsidized student loans, unsubsidized student loans, private loans. Bond 1: three-year, face value coupon bond with a price of and a coupon rate of. Bond 2: two-year, face value coupon bond with a price of and a coupon rate of 6%
