An investor purchases a bond for $949. The bond pays $70 a year for three years...
An investor purchases a bond for $949. The bond pays $70 a year for three years and then matures (it is redeemed for $1,000). What is the internal rate of return on that investment? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number.
The internal rate of return on a bond is %.
This return can be also called as current yield/yield to maturity/yield to call.
Appendix B
Appendix D
Homework Answers
Internal rate of return or yield to maturity is calculated using the RATE function:-
=RATE(nper,pmt,pv,fv)
=RATE(3,70,-949,1000)
=9.02%
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An investor purchases a bond for $949. The bond pays $70 a year
for three years...
8. An investor purchases a bond for $949. The bond pays $60 a year for three...
8. An investor purchases a bond for $949. The bond pays $60 a year for three years and then matures (it is redeemed for $1,000). What is the internal rate of return on that investment? In Chapter 13, what was this return called?
In the section on the yield to call, a bond pays annual interest of $80 and...
In the section on the yield to call, a bond pays annual interest of $80 and matures after ten years. The bond is valued at $1,147 if the comparable rate is 6 percent and the bond is held to maturity. If, however, an investor expects the bond to be called for $1,050 after five years, the value of the bond would be $1,122. Investor A expects the bond to be called and investor B expects the bond not to be...
Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70...
Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. Question a. What is the value of the bond if the markers required yield to...
Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70...
Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. a. What is the value of the bond if the markers required yield to maturity...
A 15 year bond has a par-value of 500 and pays semi-annual coupons at a 7% rate. An investor purchases the bond at a pri...
A 15 year bond has a par-value of 500 and pays semi-annual coupons at a 7% rate. An investor purchases the bond at a price such that its yield to maturity is 6% convertible semi-annually. The investor sells the bond immediately after 8th payment at a price such that its new owner's yield to maturity is 5% convertible semi-annually. What was the original investor's yield convertible semi-annually on this investment over the 4-year period?
Charlotte's Clothing issued a 5 percent bond with a maturity date of 15 years. Five years...
Charlotte's Clothing issued a 5 percent bond with a maturity
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for $690. Assume that the bond pays interest annually.
What is the current yield? Round your answer to two decimal
places.
%
What is the yield to maturity? Use Appendix B and Appendix D to
answer the question. Round your answer to the nearest whole
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%
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An investor purchases a mutual fund share for $100. The fund pays dividends of $6, distributes...
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9- An 8% coupon rate $1,000 bond matures in 10 years, pays interest semi-annually, and has...
9- An 8% coupon rate $1,000 bond matures in 10 years, pays interest semi-annually, and has a yield to maturity of 5.5%. What is the current market price of the bond?______ A- $889.35 B- $1,000 C- $1,190.34 D- $993.62 10- If you earned a rate of return of 8% on your bond investments last year. During that time the inflation rate was 2.68%. What is your real rate of return? A- 3.98% B- 4.57% C- 4.72% D- 5.18%
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a.
b.
c.
Three years ago you purchased a 9% coupon bond that pays semiannual coupon payments for $962. What would be your bond equivalent yield if you sold the bond for current market price of $1,045? Your bond equivalent yield if you sold the bond for current market price is Round to two decimal places. Assume that an investor pays $920 for a long-term bond that carries a coupon of 11%. In 3 years, he hopes to sell the...
(Related to Checkpoint 9.3) (Bond valuation relationships) You own a bond that pays $100 in annual...
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Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. Question a. What is the value of the bond if the markers required yield to...
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a.
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Three years ago you purchased a 9% coupon bond that pays semiannual coupon payments for $962. What would be your bond equivalent yield if you sold the bond for current market price of $1,045? Your bond equivalent yield if you sold the bond for current market price is Round to two decimal places. Assume that an investor pays $920 for a long-term bond that carries a coupon of 11%. In 3 years, he hopes to sell the...
(Related to Checkpoint 9.3) (Bond valuation relationships) You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 15 years. The market's required yield to maturity on a comparable-risk bond is 12 percent. a. Calculate the value of the bond. b. How does the value change if the yield to maturity on a comparable-risk bond (i) increases to 15 percent or (ii) decreases to 8 percent? c. Explain the implications of your answers...
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