ZuoTi.Pro
Question

Question 4: On July 10, 2015 you purchase a $10,000 T-note that matures on December 31,...

Question 4: On July 10, 2015 you purchase a $10,000 T-note that matures on December 31, 2024 (settlement occurs two days after purchase, so you receive actual ownership of the bond on July 12, 2015). The coupon rate on the T-note is 2.125 percent. The last coupon payment occurred on June 30, 2015 (12 days before settlement), and the next coupon payment will be paid on December 31, 2015 (172 days from settlement).

  1. Calculate the accrued interest due to the seller from the buyer at settlement.
  2. Calculate the dirty price of this transaction.
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

(a). accrued interest = Facevalue of bond * coupon rate *(number of days before settlement / number of days till maturity) = $10000 * 0.02125*(12/172) = $14.83

(b) dirty price = clean price + accrued interest

here clean price of bond is not given, so we will assume $10000 as a clean price.

Therefore, dirty price will be = $10000 + $14.83 = $10014.83

0 0
Add a comment
Know the answer?
Add Answer to:
Question 4: On July 10, 2015 you purchase a $10,000 T-note that matures on December 31,...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • on October 5, 2019 you purchase a $13,000 T note that matures on August 15, 2031...

    on October 5, 2019 you purchase a $13,000 T note that matures on August 15, 2031 -(settlement occurs two days after purchase so you'll receive actual ownership of the bonds on October 7, 2019. -The coupon rate on the T-note is 4.393% and the current price quoted on the bond is 105.8125% -the last coupon payment occurred on May 15, 2019 (145 days before settlement) and the next coupon payment will be paid on November2019 (39 days from settlement) a....

  • on October 5, 2019 you purchase a $13,000 T note that matures on August 15, 2031...

    on October 5, 2019 you purchase a $13,000 T note that matures on August 15, 2031 -(settlement occurs two days after purchase so you'll receive actual ownership of the bonds on October 7, 2019. -The coupon rate on the T-note is 4.393% and the current price quoted on the bond is 105.8125% -the last coupon payment occurred on May 15, 2019 (145 days before settlement) and the next coupon payment will be paid on November2019 (39 days from settlement) On...

  • 5) On October 1, 2019, you purchase a $13,000 T-note that matures on November 15, 2031...

    5) On October 1, 2019, you purchase a $13,000 T-note that matures on November 15, 2031 (settlement occurs two days after purchase, so you receive actual ownership of the bond on October 3, 2019). The coupon rate on the T-note is 5.875 percent and the current price quoted on the bond is 105.625 percent. The last coupon payment occurred 141 days before settlement, and the next coupon payment will be paid 43 days after settlement. What is the dirty price?

  • A. On July 1, 2015 you purchase a $1,000 par T-Note that matures in 10 years....

    A. On July 1, 2015 you purchase a $1,000 par T-Note that matures in 10 years. The coupon rate is 8% and the price quote is 98.15. The last coupon payment was May 1, 2015 (63 days before the settlement) and the next is November 1, 2015 (185 days total). a. What is the dirty price? (5 points) b. What is the yield to maturity? (5 points)

  • A $10,000 face value 12% coupon corporate bond matures on March 15, 2028. You purchase the...

    A $10,000 face value 12% coupon corporate bond matures on March 15, 2028. You purchase the bond on July 16, 2015 (M1) at a quoted price of 99.375. Please, compute the bond’s YTM, its invoice price as of the settlement date (M4), and its dirty price on the purchase date (M1). State the yield as a percentage with 6 digits after the decimal point and the prices in dollars and cents. Show all calculator inputs. You must use your calculator’s...

  • 7. On December 31, 2015, Thompson Bank restructures an $800,000, 12% note receivable with $192,000 of...

    7. On December 31, 2015, Thompson Bank restructures an $800,000, 12% note receivable with $192,000 of accrued interest so that the new principal is $750,000, payable in four years at 10% Present value factors for n = 4 years are: Discount rate PV of $1 PV of an annuity 3.169865 10% 0.683013 12% 0.635518 3.037350 Required: a. Prepare the journal entry to record the loss on restructuring b. Prepare the journal entry to record the 2015 interest revenue. c. Compute...

  • Lurch Company’s December 31, 2015, balance sheet follows: Lurch Company Balance Sheet December 31, 2015 1...

    Lurch Company’s December 31, 2015, balance sheet follows: Lurch Company Balance Sheet December 31, 2015 1 Assets 2 Cash    $540,000.00 3 Inventory    450,000.00 4 Prepaid rent 60,000.00 5 Machine    $500,000.00 6 Less: Accumulated depreciation (135,000.00) 365,000.00 7    $1,415,000.00 8 9 Liabilities and Equity 10 Accounts payable $400,000.00 11 Common stock, $10 par    300,000.00 12 Additional paid-in capital 515,000.00 13 Retained earnings    200,000.00 14    $1,415,000.00 During 2016, the following transactions occurred: 1. To avoid...

  • Rhoades Tax Services began business on December 1, 2015. Its December transactions are as follows. Dec Rhoade...

    Rhoades Tax Services began business on December 1, 2015. Its December transactions are as follows. Dec Rhoades invested $20,000 in the business in exchange for common stock. Paid $1,200 cash for December rent to Bomba Realty. 2 Purchased $1,080 of supplies on account. 2 Purchased $9,500 of office equipment; paying $4,700 cash with the balance due in 30 days. Paid $1,080 cash on account for supplies purchased December 2. 14 Paid $900 cash for assistant's wages for 2 weeks' work...

  • Problem 7-09 Pharoah Inc. had the following long-term receivable account balances at December 31, 2019. Note...

    Problem 7-09 Pharoah Inc. had the following long-term receivable account balances at December 31, 2019. Note receivable from sale of division $2,100,000 Note receivable from officer 464,800 Transactions during 2020 and other information relating to Pharoah’s long-term receivables were as follows. 1. The $2,100,000 note receivable is dated May 1, 2019, bears interest at 10%, and represents the balance of the consideration received from the sale of Pharoah’s electronics division to New York Company. Principal payments of $700,000 plus appropriate...

  • The Donahoo Western Furnishings Company was formed on December 31, 2014 with $1,000,000 in equity plus...

    The Donahoo Western Furnishings Company was formed on December 31, 2014 with $1,000,000 in equity plus $500,000 in long-term debt. On January 1, 2015, all of the firm's capital was held in cash. The following transactions occurred during January 2015: January 2: Donahoo purchased $1,000,000 worth of furniture for resale. It paid $500,000 in cash and financed the balance using trade credit that required payment in 60 days. January 3: Donahoo sold $250,000 worth of furniture that it had paid...

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