MAF202 Study Guide - Final Guide: Cash Flow, Financial Institution, Mortgage Loan
Document Summary
A formula sheet is supplied at the end of this paper. Financial calculators are permitted are permitted all programs must be erased from the calculator. Instructions for candidates: this paper consists of only part a, this paper carries 60 marks, marks are indicated at the end of each question, all questions must be answered. This paper must remain in the examination room. Materials authorised for this examination must be in accordance with deakin university policy. Question 1 (this questions has two parts, part (a) and (b)) Interest rates play an important role in monetary policy determinations, economic performance and the business cycle, and the cost of funds. According expectation theory, the interest rate on a long-term bond equals the average of the short-term rates that people expect to occur over the life of the long-term bond. This implies, bonds with different maturities are perfect substitutes.
