The Mathematics of Money

646 Appendix A Answers to Odd-Numbered Exercises

17. Bad news


18. a) $8,048.83, b) $7,731.95,
    c) $6,576.53


19. Bad news


20. 6.35%


21. 7.63%


22. $407,367.99


23. Rose


24. 6.52%


25. a) $805.59; b) $26.25 semiannually, $1,000 at
    maturity; c) discount, d) higher


26. 41.52% (issuer is most likely in very bad fi nancial
    shape!)


27. $10,161.17

Chapter 6 Section 6.3

1. a) Long, b) short, c) long, d) short


2. a) Spot, b) neither


3. a) Made, b) $1,440, c) $2,300, d) 62.61%,
   e) 202.23%


4. a) Lost, b) $11,580, c) $7,835, d)
   147.80%,
   e)
   1,798.21%


5. a) Lost, b) $3,200, c) yes, d) nothing


6. Short September OJ


7. Call


8. Buy calls


9. a) Sell 2,000 shares, b) $10,360,
   c) $10,360 loss, d) $10,360 loss,
   e) $5,360 loss


10. c)
    100%, d)
    100%, e)
    51.7%


11. a) $2,602.50, b) $2,545.50, c) $750 loss,
    d) 1,167.35


12. Puts


13. a) Sell 800 shares, b) $3,760, c) $3,760 loss,
    d) $3,760 loss, e) $4,240 profi t


14. 109.21%; 486.10%


15. a) Lost, b) $2,900, c)
    55.61%,
    d)
    178.05%


16. 57,972.68%

Chapter 6 Section 6.4

1. Best  North, worst  West


2. $5,625; $4,010; $7,750; $4,075


3. $5,262


4. 6.4%; 10.05%


5. Impossible to know in advance.


6. $41.02


7. 22.987 shares


8. a) $3,102.98, b) 12.17%


9. 2.15%


10. Less;
    1.09%


11. a, b, e are false; c, d are true.


12. 6.29%


13. $3,574.47; 4.48%


14. 9.29%

Chapter 7 Section 7.1

1. a) $15,270.50, b) $22,905.75


2. $17,783.15


3. a) $0, b) $2,303.60, c) $4,261.66


4. a) $1,000, b) $5,275, c) $7,475


5. $9,239.30


6. $10,350


7. a) 6%, b) 12%, c) 18%, d) 22%


8. DB. She does not have the advantage of a long
   time for her DC balance to grow.


9. $19,505.99


10. a) $103,584.84, b) $64,423.64, c) Brad’s is
    much higher, d) they would be the same

Chapter 7 Section 7.2

1. a) $119,147.85; b) save $1,750, worth
   $77,446.10, c) save $0, worth $119,147.85


2. $322,153.66 (answers may vary slightly due to
   rounding)


3. 2.67%


4. 8.02%


5. a) $1,354.35; b) $0; c) 401(k) $200,908, Roth
   $318,902; d) it would make the 401(k) much
   more attractive


6. $4,260.23

Chapter 7 Section 7.3

1. $315,699


2. $6.75


3. 5%


4. a) $2,415,186, b) $9,531.40


5. $5,531.84


6. $353.64


7. $258.35


8. False. No matter how reasonable her assumptions
   and correct her calculations, nothing is guaran-
   teed in this life.


9. 2% when infl ation is 0%


10. $7,692.68

Chapter 8 Section 8.1

1. a) $43.91, b) $2.43, c) $73.30, d) $225.44,
   e) $43.22


2. $11.51


3. $39.45; $9.86


4. a) 185.23%, b) 57.32%, c) 7.90%


5. $363.39; $36.34


6. 25%


7. a) $69.96; b) $6.65, c) $4.39


8. $39.96


9. $11.92; $67.54


10. a) 26.32%, b) 9.40%, c) 80.04%


11. 35.09%


12. 338 jobs


13. 693 megawatts

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