Investor required a guaranteed return or yield of at least 12.1% convertible semiannually, regardless of when the bond is Redeemed.
If bond is Redeemed after 16th period, then the price having at least 12.1% annual return = $1,204.
But if the bond is redeemed at maturity or at 18th period, then the price having at least 12.1%return = $ 1,148.
Hence, if investors' yield is required at least 12.1% under any of the above alternative then the price should be minimum of the above two.
Accordingly, the required price = $ 1,148.
(1 point) Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual...
Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at a rate of 5.5 percent per half year. The issuer of the bond has the option to redeem it at the time of the 16th coupon for 2100 dollars, or at maturity for 2000 dollars. Find the price that will guarantee an investor a yield rate of at least 12.1 percent convertible semiannually, regardless of when the bond is redeemed.
Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at a rate of 5.2 percent per half year. The issuer of the bond has the option to redeem it at the time of the 16th coupon for 2100 dollars, or at maturity for 2000 dollars. Find the price that will guarantee an investor a yield rate of at least 12.3 percent convertible semiannually, regardless of when the bond is redeemed.
(1 point) A 9-year bond with a face value of 1000 dollars is redeemable at par, pays coupons at 5.9 percent per 6 months, and has a yield rate of 7.6 percent convertible semiannually. Suppose the book value immediately after the payment of the 7th coupon is equal to the price of a perpetuity (at the time of the 7th coupon) that will start making annual payments one year after the 7th coupon. If the perpetuity earns interest at 3.9...
(1 point) A 13-year bond with a face value of 2000 dollars earns interest at 9.2 percent convertible semiannually. Suppose that the yield rate is 7.3 percent convertible semiannually, and that the book value immediately after the 13th coupon payment is 2262.94 dollars. What is the redemption value?
15. A 10-year 1000 par value bond was purchased to yield 6% convertible semiannually. The bond has a bucoupon rate of 4% and pays semiannual coupons. The bond investor reinvests the coupons into an account paying a nominal annual rate of 8% convertible semiannually. Find the overall yield earned by the bond investor over the life of the bond, expressed as an effective annual rate. (A) 6.1% (B) 6.2% (C) 6.3% (D) 6.4% (E) 6.5%
(1 point) Two 1000 dollar face value bonds are both redeemable at par, with the first having a redemption date 3 years prior to the redemption date of the second. Both are bought to yield 11.7 percent convertible semiannually. The first bond sells for 802.61 dollars and pays coupons at 8.3 precent convertible semiannually. The second bond pays coupons at 5.2 percent per half year. What is the price of the second bond?
(1 point) A 7-year bond with a face value of 5000 dollars is redeemable at par and earns interest at 9.1 percent convertible semiannually. If the yield rate is 7.2 percent convertible semiannually, how large is each coupon?
5. A 30-year 1000 par value bond with coupons at 9% payable semiannually and a redemption value of 1100 is purchased for a price that results in a yield of 12% compounded semiannually. Suppose that the bond is called (i.e. redeemed) prior to the actual maturity date and results in an actual nominal yield rate convertible semiannually of 14%. Note: Assume that the bond is called immediately after a coupon payment is made. Calculate the number of years the bond...
4.1.5 Don purchases a 1000 par value 10-year bond with 8% semiannual coupons for 900. He is able to reinvest his coupon payments at a nominal rate of 6% convertible semiannually. Calculate his nomi- nal annual yield rate convertible semiannually over the ten-year riod.
Calculate the current price for a $1000 face value bond paying semiannual coupons, with the following attributes: The bond was issued 8 years ago with a 20-year (original) maturity. Coupon rate: 6% YTM: 4% $ 1,189.14 $ 830.64 $ 1,273.55 $ 1,135.78