Homework Corrections and Hints

Change, in the 5th line of part a): "He stated that in 1967 (not 1977) there were 413 million...."

The correct answers then are:

a: [.296 .091 .613]

b:

.874 .041 .085

.268 .732 0

0 0 1

c. (have to apply the transition matrix *two* times):

[.269 .069 .662]

d. (have to apply the transition matrix one more time)

[.253 .062 .685]

The annuity due in this problem should come to term on November 30, not December 1, meaning that there will be 9 compounding periods. The answer in the back may be wrong.

The answer in the book for #19 in section 5.1 is wrong.

The correct answer is $1039.76.

The answer in the book for #29 in Appendix 1 is wrong.

The answer should be negative.