Tuesday, 27 November 2012
Question No. 1:
a) Today, most of the people in our country acknowledge the importance of education in our lives.
Therefore, Mr. Akram is also planning to provide the best education to his son. In this regard, he is
planning to set aside a handsome amount for his son education. Suppose the university fee of his
son after 10 years will be Rs.200, 000. His bank is offering him 12% interest rate compounded
annually. How much amount he has to deposit in his bank account today in order to get Rs.200, 000
from his bank after 10 years? (5 marks)
b) Suppose you have some extra funds with you and you want to make investment in bonds with those
funds. Currently a 6% coupon bond with face value of Rs.1, 000 is selling at Rs.850. If you want to
keep that bond till its maturity (which is one year), then what will be the yield to maturity of this
bond? (5 marks)
Question No. 2:
a) Define GDP deflator and explain how it differs from CPI (Consumer Price Index) although both are used to measure inflation rate in an economy? (4 marks)
b) Suppose you are given the responsibility to calculate the inflation rate prevailing in an economy.
You, along with your team members, collect the following data related to that particular economy:
Years Nominal GDP Real GDP
2009 Rs. 48,300 Rs. 46,200
2010 54,400 51,000
2011 59,300 53,000
How you will measure the inflation rate based on the above data? (6 marks)
Note: You are required to provide complete working and formulas while calculating GDP deflator
a) Today, most of the people in our country acknowledge the importance of education in our lives.
Therefore, Mr. Akram is also planning to provide the best education to his son. In this regard, he is
planning to set aside a handsome amount for his son education. Suppose the university fee of his
son after 10 years will be Rs.200, 000. His bank is offering him 12% interest rate compounded
annually. How much amount he has to deposit in his bank account today in order to get Rs.200, 000
from his bank after 10 years? (5 marks)
b) Suppose you have some extra funds with you and you want to make investment in bonds with those
funds. Currently a 6% coupon bond with face value of Rs.1, 000 is selling at Rs.850. If you want to
keep that bond till its maturity (which is one year), then what will be the yield to maturity of this
bond? (5 marks)
Question No. 2:
a) Define GDP deflator and explain how it differs from CPI (Consumer Price Index) although both are used to measure inflation rate in an economy? (4 marks)
b) Suppose you are given the responsibility to calculate the inflation rate prevailing in an economy.
You, along with your team members, collect the following data related to that particular economy:
Years Nominal GDP Real GDP
2009 Rs. 48,300 Rs. 46,200
2010 54,400 51,000
2011 59,300 53,000
How you will measure the inflation rate based on the above data? (6 marks)
Note: You are required to provide complete working and formulas while calculating GDP deflator
