Instructions to students:

All questions are compulsory.

Materials:

Dictionaries are not permitted.

Actuarial Tables.

TASK: AS1201 Financial & Investment Mathematics Assignment

Question 1

A 3-month deposit account pays a rate of interest of 5% per annum convertible half-yearly.

Calculate the simple rate of discount per annum which is equivalent to the above investment over the 3-month period. (3 marks)

Question 2

An investor pays £1,200 per annum into a savings account for 10 years, and increases the payments to £1,500 per annum for the next 5 years. The payments are made annually in advance.

Calculate the accumulated amount in the savings account at the end of the 15 years if the investor achieves a yield of 6% per annum convertible half-yearly on her investment.(4 marks)