1) An outstanding bond from, “Willy Wonka” Chocolate Factory, a chocolate delicacy manufacturer, has a coupon interest of 6% that is paid semi-annually, a par value of $1,000 and will mature in the next 10 years. The required rate of return for similar investments is currently 8%. a) At what price should the bond be sold if it was purchased on 1st November 2013, is due to mature on 31st October 2023 but was instead sold on 1st November 2017? b) What is the bond’s value if it is sold three years before it matures? c) What is the bond’s value at maturity
1) An outstanding bond from, “Willy Wonka” Chocolate Factory, a chocolate delicacy manufacturer, has a coupon interest of 6% that is paid semi-annually, a par value of $1,000 and will mature in the next 10 years. The required rate of return for similar investments is currently 8%. a) At what price should the bond be sold if it was purchased on 1st November 2013, is due to mature on 31st October 2023 but was instead sold on 1st November 2017? b) What is the bond’s value if it is sold three years before it matures? c) What is the bond’s value at maturity
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1) An outstanding bond from, “Willy Wonka” Chocolate Factory, a chocolate delicacy manufacturer, has a coupon interest of 6% that is paid semi-annually, a par value of $1,000 and will mature in the next 10 years. The required rate of
a) At what price should the bond be sold if it was purchased on 1st November 2013, is due to mature on 31st October 2023 but was instead sold on 1st November 2017?
b) What is the bond’s value if it is sold three years before it matures?
c) What is the bond’s value at maturity?
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