Question

Fifteen years ago you purchased for $950 a bond issued by the DEF Co The bond had twenty years to maturity, a par value of $1,000, a 12% coupon na paid interest semiannually. Since you had no immediate use for the inte payments, you deposited them in your savings account. For the first 5 years o. bank paid 4% compounded semiannually, but for the last 10 years you have only earned 3% compounded semiannually. Tomorrow you will receive your 30th interest payment, and you plan to sell the bond immediately afterwards at its fair market price. The market rate of return for bonds of this type is currently 15%. What will be your annualized holding period return on this investment?

0 0
Add a comment Improve this question Transcribed image text
Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
Fifteen years ago you purchased for $950 a bond issued by the DEF Co The bond...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
  • Problem 16-02 You sold a stock for $60 that you purchased fifteen years earlier for $35....

    Problem 16-02 You sold a stock for $60 that you purchased fifteen years earlier for $35. What was the holding period return and annualized compounded returns? Use Appendix A to answer the questions. Round your answers to the nearest whole number. 0% Holding period return: Annualized compounded return:

  • Six years ago, you purchased a callable bond with fifteen years until maturity. The bond has...

    Six years ago, you purchased a callable bond with fifteen years until maturity. The bond has a $1,000 par value and pays interest semiannually. The bond has 9% coupon rate and a 6% yield to maturity. The bond offers three years of call protection and a 2% call premium. a. How much did you pay for the bond at the time of purchase? b. Today, the firm called the bond. What is the bond’s yield to call? c. Did the...

  • Five years ago you purchased a $1,000 U.S. Treasury bond for $920. At the time of...

    Five years ago you purchased a $1,000 U.S. Treasury bond for $920. At the time of purchase it had a 12- year remaining maturity and a 6% coupon (paid semiannually). Market interest rates have decreased 2% since then. What is the current market value of your bond?

  • 5. A 20-year bond with $1,000 face amount and 7% annual coupons was issued twenty years...

    5. A 20-year bond with $1,000 face amount and 7% annual coupons was issued twenty years ago. You bought the bond six years ago, immediately after a coupon was paid, when the market interest rate on such bonds was 6%, and you sold it two years ago, immediately after a coupon was paid, when the market interest rate was 5%. What rate of return did you earn over the period when you held the bond? (Hint: You must figure out...

  • 1. (Holding Period Yield) A few years ago, XYZ Corp. issued a bond with a par...

    1. (Holding Period Yield) A few years ago, XYZ Corp. issued a bond with a par value of $1000 and annual coupon rate of 7 percent paid SEMIANNUALLY (2 times per year). At present (time 0), the bond has 20 years to maturity. a. If the yield to maturity (YTM) on this bond is now 10 percent, what is the current price of the bond (at time 0)? In your answer, please indicate your entries: N = I/Y= FV =...

  • 4 years ago you purchased a 13 year maturity, 2.4% coupon annual pay bond at a...

    4 years ago you purchased a 13 year maturity, 2.4% coupon annual pay bond at a price of $101 per $100 of face value. Shortly after you purchased the bond, yields changed to 7.79%. If you sell the bond today at a price of $92 per $100 of face value, what is your annualized holding period return?

  • 3 years ago you purchased a 12 year maturity, 3.4% coupon annual pay bond at a...

    3 years ago you purchased a 12 year maturity, 3.4% coupon annual pay bond at a price of $93 per $100 of face value. Shortly after you purchased the bond, yields changed to 5.04%. If you sell the bond today at a price of $105 per $100 of face value, what is your annualized holding period return?

  • You sold a stock for $70 that you purchased fourteen years earlier for $40, What was...

    You sold a stock for $70 that you purchased fourteen years earlier for $40, What was the holding period return and annualized compounded returns? Use Appendix A answer the questions. Round your answers to the nearest whole number Holding period return: Annualized compounded return:

  • You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased...

    You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 6 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 2% per year compounded semiannually, what will be your minimum selling price for the bond?

  • You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased...

    You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 4 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 4% per year compounded semiannually, what will be your minimum selling price for the bond?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT