a premium bond is a bond:
1) whose issue price is greater than its face value.
2) whose yield to maturity is lower than its coupon rate.
Bond X and Bond Y were issued at a premium to par value three years ago. Bond X matures in five years, and Bond Y matures in ten years. Both bonds carry the same credit rating. Bond X has a coupon of 7 .25%, and Bond Y has a coupon of 8.00%. If the yield to maturity for both bonds is 7.60% today: A. both bonds are priced at a premium. B. Bond X is priced at a premium, and...
Bond Amortization = Bond Discount or Premium / Number of Interest Periods Interest Paid = Face Amount of Bonds x Stated Interest Rate Interest Expense = Interest Paid + Discount ( or – Premium) Amortization On October 1, 2018 ABC issued 5%, 10-year bonds with a face value of $4,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. What is interest expense for 2018? Assume ABC Company...
Bond Premium, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Premium Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $ $94,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $108,120,680. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries with a compound transaction, if an...
Before you begin the bond, determine if the bond will sell at a discount, a premium, or at par. Find the price of the floowing bond: Coupon rate of 8.75% pays semiannual coupons, Face value of $1000 risk-adjusted rate of 8.0%, and 10 years to maturity
34. Components of Bond Returns Bond P is a premium bond with a coupon rate of 8.2 percent. Bond D is a discount bond with a coupon rate of 5.9 percent. Both bonds make annual payments and have a YTM of 7 percent, a par value of $1,000, and five years to maturity. What is the current yield for Bond P? For Bond D? If interest rates remain unchanged, what is the expected capital gains yield over the next year...
If a bond has a coupon of 5% and YTM of 7%, what type of bond is it (premium or discount)?
Bond P is a premium bond with a coupon of 8.8 percent , a YTM of 7.55 percent, and 15 years to maturity. Bond D is a discount bond with a coupon of 8.8 percent, a YTM of 10.55 percent, and also 15 years to maturity. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 5 years? In 10 years? In 14 years? In 15 years?
Apply the Straight-Line Method of Amortizing Bond Discount and Bond Premium 7. In the Cromwell Inc. example, the company sold $100,000, 5-year, 10% bonds on January 1, 2017, for $98,000. Interest is payable on January 1. The $2,000 bond discount ($100,000 - $98,000) amortization is $400 ($2,000 + 5) for each of the five amortization periods. a. The entry to record the accrual of bond interest and the amortization of bond discount on the first interest date (December 31) is:...
18. Given the information below, which bond(s) will be issued at a premium? Bond 1 Bond 2 Bond 3 Bond 4 Stated Rate of Return 6% 4% 8% 7% Market Rate of Return 7% 3% 8% 5%
If the yield to maturity on a Treasury bond is 2% and the risk premium on a corresponding corporate bond is 33 basis points, then the yield to maturity on the corporate bond must be a)2.66% b)2.33% c)2.0033% d)1.67%