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Hi Deepak, Yes you are right - I did not read the question carefully - it is indeed $500 which works out to a Perpetuity = $500/4% = $12,500. I just naturally assumed it was the semiannual coupon = $1,000. Thanks!:) Jayanthi

Hi David: For the problem below: 316.3. Sarah won a lottery that gives her a choice between two payouts. Neglecting any liquidity or counterparty risk, she simply wants to select the option with the higher present value. Her choices are between an annuity and a perpetuity: I. The annuity will...

Hi @Shazam023, I think this has something to do with perfect multicollinearity between the regressors, where one regressor can be written as a perfect linear function of the other regressors. Because of this, it is impossible to compute the OLS estimates of the regression and therefore the R =...

Thanks - yes, please ask David:) - he is the right person to ask... Jayanthi

Hi @Shazam023, I am not sure that I understand your question right. Nevertheless, just giving it a shot: In Multiple Regression Analysis (1) An increase in the R^2 does not necessarily mean that an added variable is statistically significant: To ascertain whether an added variable is...

Thanks David - this is crystal clear - got it:D Yes, the difference between bond-equivalent basis and effective annual yield definitely ran through my mind... Jayanthi

Hi David, Q. 315.3. Assume the reference term structure, which happens to be the theoretical Treasury spot rate curve, is flat at a semiannually compounded rate of 1.30% per annum. A $100 par bond with a 20-year maturity pays a 4 3/8 coupon (4.375% coupon rate) and has a current price of...

Thanks a lot, Nicole - appreciate it:) Jayanthi

Hi Nicole, I am facing a problem with the $15 Amazon gift card that you sent to me on August 31st, 2015. I had applied it to my account on Amazon (www.amazon.in). I was just curious to find out the expiration date and how it works. I was under the impression that the gift card with its voucher...

Thanks Nicole - received it:) Jayanthi

Thanks for the star, Nicole - appreciate it:) Jayanthi

You are very welcome, Deepak:) Jayanthi

Hi Deepak, I get the answer to be (C) 2 year spot rate = 5.51%, 3 year spot rate = 6.05% Bond 1 1 year (zero-coupon) treasury security, YTM = 5%, Price = 95.2381% of par $95.2381 = $100*d(1.0) Solving for d(1.0) we get d(1.0) = 0.952381 To compute 1 year spot rate r(1.0): 1 + r(1.0) =...

Thanks a lot Nicole - would be grateful if you could email the $15 Amazon gift card to me:) Jayanthi

Thanks for the star Nicole and David - appreciate it:)

Thanks a lot - appreciate it:)

Hi @QuantMan2318, Is the DerivaGem software user friendly? I have not used it so far... Thanks!

Hi @381447 The implied volatility is the value of sigma that when substituted into the Black-Scholes equation gives C = $1.25. Unfortunately, it is not possible to invert the Black-Scholes equation so that sigma is expressed as a function of S, K, r, T and C. However, an iterative search...

Hi @arkabose, Just to let you know that the GARP 2015 Practice Exam only covers questions from the actual exam between 2011 - 2014. So, for exam purposes, in all likelihood, it will not cover material from 2004. Thanks! Jayanthi

Thanks a lot, Nicole:) Jayanthi