A bank has issued a six-month, $1.5 million negotiable CD with a 0.54 percent quoted annual interest rate (4co, apl a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. Complete this question by entering your answers in the tabs below. Required A Required B Required C Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers to 4 decimal places. (e.g., 32.1616)) Band equivalent yield Secondary market quoted yield EAR 0.0019 % 0.5404 % < Required B Required C>

A bank has issued a six-month, $1.5 million negotiable CD with a 0.54 percent quoted annual interest rate (4co, apl a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. Complete this question by entering your answers in the tabs below. Required A Required B Required C Immediately after the CD is issued, the secondary market price on the $2 million CD falls to $1,498,600. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.5 million face value CD. (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers to 4 decimal places. (e.g., 32.1616)) Band equivalent yield Secondary market quoted yield EAR 0.0019 % 0.5404 % < Required B Required C>

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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San Miguel Company's 18-year, $1,000 par value bonds pay 6.5 percent interest annually. The market price of the bond is $1,105, and your required rate of return is 8.5 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate or return. c. Should you purchase the bond? Why or why not? (*You must show your calculation process as well.)
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A bank has issued a six-month, $1.0 million negotiable CD with a 0.53 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $1 million CD falls to $998,900. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.0 million face value CD. Required A: Bond Equivalent Yield ___ EAR____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 3 decimal places.) Required B: CD Holder will receive at maturity_____(Do not round intermediate calculations. Round your answer to nearest whole number.) Required C: Bond Equivalent Yield____ Secondary Market Quoted Yield______ EAR_____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 4 decimal places.
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