A bond with face value $10,000 simple interest 6.45% and a term for 12 years is originally bought by Linda. After 33 months, she sells it to Carly for $11,400. Carly then holds on to it for 7 years, eventually selling it to Mike for $14,950. Mike keeps the bond until matures and cashes it in. Match the percent profit to each investor. Linda's percent profit. A 31.1% v Carly's percent profit. B. 18.7% v Mike's C. 14%

A bond with face value $10,000 simple interest 6.45% and a term for 12 years is originally bought by Linda. After 33 months, she sells it to Carly for $11,400. Carly then holds on to it for 7 years, eventually selling it to Mike for $14,950. Mike keeps the bond until matures and cashes it in. Match the percent profit to each investor. Linda's percent profit. A 31.1% v Carly's percent profit. B. 18.7% v Mike's C. 14%

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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In 5 years Sonia requires $100,000 to fund the down payment on a cottage. Sonia is very risk adverse. Which of the following bonds should she buy? O a) None of these answers A five year BBB credit rated 8% semi-annual coupon bond maturing in b) 5 years trading at 104. c) A five year BBB credit rated strip coupon bond (i.e., zero-coupon bond) maturing in 5 years. A five year Government of Canada 8% semi-annual coupon bond d) maturing in 5 years trading at 104. A five year Government of Canada strip coupon bond (i.e., zero-coupon e) bond) maturing in 5 years.
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A client owns a $1,000 10-year bond. The coupon rate is 6 percent. The client acquired the bond three years ago at a discount. What is knwon about the interest rates three years ago? A. The stated rate was less than 6 percent. B. The stated rate was more than 6 percent. C The market rate was less than 6 percent. D. The market rate was more than 6 percent.
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Vic Zaloom bought a corporate bond from IBEM Corporation for $100,000. The face value of the bond is $100,000 and will mature in twenty years. A $2,500 dividend is expected to be paid every quarter. If Vic plans to keep the bond until maturity, determine the effective rate of return he is getting on this investment. A. 10.38% B. 10.00% C. 12% D. 9.15%
Sara owns one bond A and one bond B. The total value of these two bonds is $1,860.00. Bond A pays semi-annual coupons, matures in 12 years, has a face value of $1,000.00, and pays its next coupon in 6 months. Bond B pays annual coupons, matures in 3 years, has a face value of $1,000.00, has a yield-to- maturity of 10.64 percent, and pays its next coupon in one year. Both bonds have a coupon rate of 9.30 percent. What is the yield-to-maturity for bond A? O 10.54% (plus or minus 2 bps) O 10.92% (plus or minus 2 bps) O 5.92% (plus or minus 2 bps) O 8.87% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer
10 Bianca purchased a $5,000 bond that was paying a coupon rate of 4.50% compounded semi-annually and had 7 more years to mature. The yield at the time of purchase was 6.70% compounded semi-annually. a. How much did Bianca pay for the bond? Round to the nearest cent W THAIM hp SUBMIT QUESTION SAVE PROGRESS
11. Jared wants to invest money in a 6% savings account that compounds semiannually. Jared would like the account to have a balance of $110,000 2-years from now. How much must Jared deposit to accomplish his goal? 12. Pathfinder issues a bond with a coupon rate of 9%, face amount of $50,000, and is due in 5 years. Interest payments are made semi-annually. The effective rate for this type of bond is 10%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

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