Homework Answers
Solution 1:
| Computation of bond price | |||
| Table values are based on: | |||
| n= | 4 | ||
| i= | 4.50% | ||
| Cash flow | Table Value | Amount | Present Value |
| Par (Maturity) Value | 0.83856 | $1,000.00 | $839 |
| Interest (Annuity) | 3.58753 | $30.00 | $108 |
| Price of bonds | $946 | ||
| Bond Amortization Schedule | ||||
| Half year | Coupon | Interest earned | Amount for amortization of premium | Book value |
| Issue date | $946 | |||
| 1 | $30 | $43 | $13 | $959 |
| 2 | $30 | $43 | $13 | $972 |
| 3 | $30 | $44 | $14 | $985 |
| 4 | $30 | $44 | $14 | $1,000 |
Solution 2:
| Half year | Approximated Book value |
| Issue date | $946.00 |
| 1 | $959.50 |
| 2 | $973.00 |
| 3 | $986.50 |
| 4 | $1,000.00 |
Add Answer to:
(1 point) A $1000 par value two-year 6% bond with semiannual coupons bought to yield 9%....
7. Problem 7: 1. A $1,000 par value ten-year 8% bond has semiannual coupons. The redemption...
7.
Problem 7: 1. A $1,000 par value ten-year 8% bond has semiannual coupons. The redemption value equals the par value. The bond is purchased at a premium to yield 6% convertible semiannually. What is the amount for amortization of the premium in the tenth coupon? 2. A ten-year 5% bond with semiannual coupons is purchased to yield 6% compounded semiannually. The par value and redemption value are both $1,000. What is the book value of the bond six years...
A $1,000 6% n-year par-value bond has annual coupons. Tabitha bought the bond to yield 5%....
A $1,000 6% n-year par-value bond has annual coupons. Tabitha bought the bond to yield 5%. The amount of interest in the first coupon is $52.89. Calculate the amount of premium Tabitha paid for the bond.
Sara purchases a 3-year bond with a par value of $100, 4% annual coupons, and redeemable...
Sara purchases a 3-year bond with a par value of $100, 4% annual coupons, and redeemable at $104. The annual effective yield rate is 6% a) Find the bond purchase price P- b) The bond is sold at a A. premium B. discount c) Fill in the the bond amortization schedule Amount for Period Coupon Interest Earned Accumulation o Book Value Discount 0 Total Note that ΣΡ, C-P-The Amount of Premium. The "principal repaid" is called the "amount for accumulation...
Dave purchased a 10-year par value bond with semiannual coupons at a nominal annual rate of...
Dave purchased a 10-year par value bond with semiannual coupons at a nominal annual rate of 4% convertible semiannually at a price of 1021.50. The bond can be called at par value F on any coupon date starting at the end of year 5. The price guarantees that Dave will receive a nominal annual rate of interest convertible semiannually of at least 6%. Determine whether the bond was bought at par, at a discount, or at a premium. at a...
Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at...
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.
Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at...
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.
(1 point) Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual...
(1 point) Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at a rate of 4.2 percent per half year. The issuer of the bond has the option to redeem it at the time of the 16th coupon for 2000 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.
3) Consider a $1000 par value bond with a 5% coupon rate and semiannual coupons. The...
3) Consider a $1000 par value bond with a 5% coupon rate and semiannual coupons. The bond has a maturity of 4 years. Draw a time line showing the cash flows of this bond.
(1 point) A 9-year bond with a face value of 1000 dollars is redeemable at par,...
(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...
4) Suppose a three-year, $100 par value bond with a 8% coupon rate and semiannual coupons...
4) Suppose a three-year, $100 par value bond with a 8% coupon rate and semiannual coupons is trading with a yield to maturity of 10%. a) What is the current price of this bond? Is it trading at a discount, at par, or at a premium? b) What will be the price of the bond, if yield to maturity decreases to 6%?
7.
Problem 7: 1. A $1,000 par value ten-year 8% bond has semiannual coupons. The redemption value equals the par value. The bond is purchased at a premium to yield 6% convertible semiannually. What is the amount for amortization of the premium in the tenth coupon? 2. A ten-year 5% bond with semiannual coupons is purchased to yield 6% compounded semiannually. The par value and redemption value are both $1,000. What is the book value of the bond six years...
Sara purchases a 3-year bond with a par value of $100, 4% annual coupons, and redeemable at $104. The annual effective yield rate is 6% a) Find the bond purchase price P- b) The bond is sold at a A. premium B. discount c) Fill in the the bond amortization schedule Amount for Period Coupon Interest Earned Accumulation o Book Value Discount 0 Total Note that ΣΡ, C-P-The Amount of Premium. The "principal repaid" is called the "amount for accumulation...
Dave purchased a 10-year par value bond with semiannual coupons at a nominal annual rate of 4% convertible semiannually at a price of 1021.50. The bond can be called at par value F on any coupon date starting at the end of year 5. The price guarantees that Dave will receive a nominal annual rate of interest convertible semiannually of at least 6%. Determine whether the bond was bought at par, at a discount, or at a premium. at a...
(1 point) Suppose that a 9-year bond with a face value of 1000 dollars pays semiannual coupons at a rate of 4.2 percent per half year. The issuer of the bond has the option to redeem it at the time of the 16th coupon for 2000 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.
3) Consider a $1000 par value bond with a 5% coupon rate and semiannual coupons. The bond has a maturity of 4 years. Draw a time line showing the cash flows of this bond.
(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...
4) Suppose a three-year, $100 par value bond with a 8% coupon rate and semiannual coupons is trading with a yield to maturity of 10%. a) What is the current price of this bond? Is it trading at a discount, at par, or at a premium? b) What will be the price of the bond, if yield to maturity decreases to 6%?
Most questions answered within 3 hours.
-
1) In your own words, explain what elasticity of supply is
signifying. (Put in your own...
asked 1 minute from now -
The risk of material misstatement due to fraud relating to
revenue recognition should be a. given...
asked 3 minutes ago -
what is spanish flu epidemiology with photos and reference for
photos
asked 6 minutes ago -
Light of wavelength 500 nm is used in a two slit interference
experiment, and a fringe...
asked 25 minutes ago -
A laser with a wavelength of 470. nm illuminates two narrow
slits. The interference pattern from...
asked 7 minutes ago -
1. What is the concentration of potassium hydroxide in the
reaction mixture formed by mixing 50.00...
asked 21 minutes ago -
CISC 1115 Assignment 6 Write a complete program, including
javadoc comments, to process voter statistics Input...
asked 15 minutes ago -
(25) A boat is traveling at 5.00 m/s in the same direction as
ocean waves of...
asked 18 minutes ago -
which of these answers is most reasonable estimate of the proton
concentration [h+] for an aqueous...
asked 23 minutes ago -
If the Henry’s law constant for oxygen in water is 1.3 x 10-3
M/atm at 25...
asked 24 minutes ago -
Your child is planning attend summer camp for three months,
starting 7 months from now. The...
asked 34 minutes ago -
asssume you are the employee representative on the executive
board at your company. You know the...
asked 39 minutes ago