SOA Exam FM Sample Question 351
Study guide: Exam FM-2
Bank A lends a certain sum of money at an annual effective interest rate of 7%. The loan is to be repaid by 16 annual payments of 1000, with the first payment due after one year.
Immediately after receiving the 8th payment, Bank A sells the right to receive the remaining 8 payments to Bank B. Bank A's yield on the entire transaction is an annual effective interest rate of 6%.
Calculate the amount that Bank B paid to assume the loan.
- A) 5159
- B) 5541
- C) 5655
- D) 5971
- E) 6210
Answer this question and see the worked solution