![d) A loan of £100 nominal is issued with interest payments (coupon) payable at 6% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is liable to income tax at a rate of 22%, and capital gains tax at 30% i) Calculate the price an investor should pay for the loan to achieve a required net redemption yield of 6%pa. [4 marks] ) Calculate the net redemption yield an investor would achieve if they were to [4 marksl pay £90 for the loan](http://img.homeworklib.com/questions/fa911b00-4161-11ea-a4b4-73716635e3e9.png?x-oss-process=image/resize,w_560)
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d) A loan of £100 nominal is issued with interest payments (coupon) payable at 6% p.a....
d) A loan of £100 nominal is issued with interest payments (coupon) payable at 6% p.a....
d) A loan of £100 nominal is issued with interest payments (coupon) payable at 6% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is liable to income tax at a rate of 22%, and capital gains tax at 30% i) Calculate the price an investor should pay for the loan to achieve a required net redemption yield of 6%pa. [4 marks] ) Calculate the...
a) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a....
a) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is not liable to income tax or capital gains tax, with a required redemption yield of 6%pa: i) Calculate the price the investor should pay for the loan. li) If the price of the loan is £100, with the same interest...
c) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a....
c) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is liable to income tax at a rate of 22%, but not capital gains tax, with a required redemption yield of 6%pa., calculate the price the investor should pay for the loan. [3 marks]
7. Ali buys a new car and finances it with a loan of 22,000. He will...
7. Ali buys a new car and finances it with a loan of 22,000. He will make n monthly payments of 450.30 starting in one month. He will make one larger payment in n + 1 months to pay off the loan. Payments are calculated using an annual nominal interest rate of 8.4%, convertible monthly. Immediately after the 18th payment he refinances the loan to pay off the remaining balance with 24 monthly payments starting one month later. This refinanced...
A fixed interest stock with an optional redemption date at any time between 14 and 24 years from ...
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A fixed interest stock with an optional redemption date at any time between 14 and 24 years from the date of isssue is redeemable at 1 1 1 %. It pays coupons of 4.1% per annum in arrears. An investor, subject to 32% income tax and 35% capital gains tax, makes a with-dividend purchase half a year after issue a £9,000 nominal of the bond and obtains a net...
6. Suppose that you purchase a 2 year coupon bond at the time it is issued...
6. Suppose that you purchase a 2 year coupon bond at the time it is issued for $1100. The face value of the bond is $1000, with annual coupon payments of $80. a. What is the bond's "coupon rate"? b. What is the bond's "current yield"? C. What is the bond's (nominal) "yield to maturity"? d. If you hold the bond for 1 year and sell it for $1035 (after collecting the first coupon payment), what is your "holding period...
QUESTION 6 A loan of L is to be repaid with 40 payments of 100 at...
QUESTION 6 A loan of L is to be repaid with 40 payments of 100 at the end of each month. Interest on the loan is charged at an annual nominal rate of i, 0 <i< 1, convertible monthly. The outstanding balances immediately after the 8th and 24th payments are 2308.15 and 1345.50, respectively. Calculate the amount of interest repaid in the 15th payment. Round your answer to the nearest whole number.
1) Following are the features of a mortgage loan: Loan amount $100,000 Nominal interest rate 6.2%...
1) Following are the features of a mortgage loan: Loan amount $100,000 Nominal interest rate 6.2% Term – 30 years (Fixed) Required: (a) Calculate the required monthly mortgage payment. (b) Calculate the amount of interest and the repayment of principal amount for the first month. 2) Consider the two bonds as given below: Bond X has 12 years to maturity, a coupon rate of 8% with a part value of $1,000, and the yield-to-maturity of 6%. Calculate the price of...
2. You just bought a newly issued bond which has a face value of S1,000 and pays its coupon once annually. Its coup...
2. You just bought a newly issued bond which has a face value of S1,000 and pays its coupon once annually. Its coupon rate is 5%, maturity is 20 years and the yield to maturity for the bond is currently 8%. a. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary.) (2 marks) b. Calculate what the bond price would be in one...
15. 10 years ago, Alan started to repay a loan by making equal month-end repayments of $3,200 for 15 years. If the inter...
15. 10 years ago, Alan started to repay a loan by making equal month-end repayments of $3,200 for 15 years. If the interest rate charged for the loan is 12% per annum compounded monthly, the loan outstanding immediately after the 120th payment is closest to A. $125,430 B. $138,420 C. $142,440 D. $143,860 16. Andrew's monthly instalment made in arrears to repay his loan fully is $4,500. If the effective for the loan is 0.3%, calculate the amount of the...
d) A loan of £100 nominal is issued with interest payments (coupon) payable at 6% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is liable to income tax at a rate of 22%, and capital gains tax at 30% i) Calculate the price an investor should pay for the loan to achieve a required net redemption yield of 6%pa. [4 marks] ) Calculate the...
a) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is not liable to income tax or capital gains tax, with a required redemption yield of 6%pa: i) Calculate the price the investor should pay for the loan. li) If the price of the loan is £100, with the same interest...
c) A loan of £100 nominal is issued with interest payments (coupon) payable at 8% p.a. monthly in arrears for 7 years, with the amount of the loan repayable at the end of the term. For an investor who is liable to income tax at a rate of 22%, but not capital gains tax, with a required redemption yield of 6%pa., calculate the price the investor should pay for the loan. [3 marks]
Step by step solution for obtaining the right answer
thanks ☺
A fixed interest stock with an optional redemption date at any time between 14 and 24 years from the date of isssue is redeemable at 1 1 1 %. It pays coupons of 4.1% per annum in arrears. An investor, subject to 32% income tax and 35% capital gains tax, makes a with-dividend purchase half a year after issue a £9,000 nominal of the bond and obtains a net...
6. Suppose that you purchase a 2 year coupon bond at the time it is issued for $1100. The face value of the bond is $1000, with annual coupon payments of $80. a. What is the bond's "coupon rate"? b. What is the bond's "current yield"? C. What is the bond's (nominal) "yield to maturity"? d. If you hold the bond for 1 year and sell it for $1035 (after collecting the first coupon payment), what is your "holding period...
QUESTION 6 A loan of L is to be repaid with 40 payments of 100 at the end of each month. Interest on the loan is charged at an annual nominal rate of i, 0 <i< 1, convertible monthly. The outstanding balances immediately after the 8th and 24th payments are 2308.15 and 1345.50, respectively. Calculate the amount of interest repaid in the 15th payment. Round your answer to the nearest whole number.
2. You just bought a newly issued bond which has a face value of S1,000 and pays its coupon once annually. Its coupon rate is 5%, maturity is 20 years and the yield to maturity for the bond is currently 8%. a. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary.) (2 marks) b. Calculate what the bond price would be in one...
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