6) rate is 6% per year compounded quarterly. Currently there is a buyer who has offered Bill $10,300 for the bond. Bill wishes to eam 8% per year compounded quarterly on the bond investment that he has held for 4 years. Should Bill sell the bond? Explain. Show all work. Bill purchased a $10,000 municipal bond at a discount for $9,500 four years ago. The bond

6) rate is 6% per year compounded quarterly. Currently there is a buyer who has offered Bill $10,300 for the bond. Bill wishes to eam 8% per year compounded quarterly on the bond investment that he has held for 4 years. Should Bill sell the bond? Explain. Show all work. Bill purchased a $10,000 municipal bond at a discount for $9,500 four years ago. The bond

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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Tom borrowed $300,000 for his son Remy's law school tuition at the University of Missisippi. Tom received a rate of 3.75 for five years. Using 360 days in a year. what is the maturity value of the loan?
Assume that three years ago, you purchased a corporate bond that pays 6.50 percent. The face value of the bond was $1,000. Also assume that three years after your bond investment, comparable bonds are paying 7.00 percent. (a) What is the annual dollar amount of interest that you receive from your bond investment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Annual interest (b) Assuming that comparable bonds are paying 7.00 percent, what is the approximate dollar price for which you could sell your bond? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Approximate bond price
A $10,000, 10-year corporate bond is offered at a premium for $11,000. The bond rate is 10% 6) per year compounded quarterly. If John wishes to earn 8% per year compounded quarterly on the bond investment, should he purchase the bond assuming he keeps the bond till it matures and then redeems it at face value? Explain. Show all work.
Bruce bought an apartment at a price of $7,000,000 on January 1, 2020. He borrowed 70% of the property value from Bank at that time. The first monthly installment was due on January 31, 2020. The mortgage is a floating-rate one and has a maturity of 10 years. The interest rate on the loan is set equal to the prime rate minus 1.5%. On March 1, 2022, Bruce's apartment had a market value of $9,000,000. Bruce talked to Hang Seng Bank to arrange a new mortgage to replace the old one. In the new mortgage, Bruce borrowed 70% of the market value of his apartment. The new mortgage has a maturity of 10 years with the first monthly installment due on March 31, 2022. The interest rate is set equal to the prime rate minus 2.5%. The prime rate has been constant at 5% from January 2020 to March 2022. • (a) What is the monthly installment of the original mortgage? • (b) How much would Bruce receive from bank when the new mortgage was arranged to replace the old one on March 1, 2022? • (c) What is the…
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
Ms. Jones wants to make 8% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 6%, $10,000 bond that will mature in 16 years and pays quarterly interest. This means that she will receive quarterly interest payments on the face value of the bond ($10,000) at 6% nominal interest. After 16 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?
Nikul
James has a mortgage of $86,500 at 8% for 15 years. The property taxes are $3,900 per year, and the hazard insurance premium is $764.50 per year. Find the monthly PITI payment (in $). (Round your answer to the nearest cent. Use this table as needed.) $
Bill Mitselfik wants to buy a bond. It has a face value of $50,000, a bond rate of 6% (nominal), payable semi- annually, and matures in 10 years. Bill wants to earn a nominal interest of 8%. How much should Bill pay for the bond?
Kari is purchasing a home for $220,000. The down payment is 25% and the balance will be financed with a 15 year mortgage at 8% and 4 discount points. Kari made a deposit of $20,000 (applied to the down payment) when the sales contract was signed. Kari also has these expenses: credit report, $70; appraisal fee, $110; title insurance premium, 1% of amount financed; title search, $200; and attorney's fees, $500. Find the closing costs (in $). $ ____________________
Jeff purchased a house costing $200,000. He put 20% down and borrowed the balance negotiating a 4.20% conventional fixed-rate mortgage loan with a maturity of 15 years Approximately, how long would it take Jeff to repay one-half of the original loan principal balance if payments are made as agreed?
Michael bought a $20,000, 26-week T-bill at a discount rate of 5.9% on August 12. He sold it 11 weeks later at a discount rate of 6.5%. Find Michael's purchase price, the discount 11 weeks later when he sold it, proceeds to Michael, and the effective interest rate for the time he held the note. (Hint: Treat T-bills as a discount note.) Michael's purchase price was $. (Round to the nearest cent as needed.) C

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