A corporate bond has a face value of $10,000, a bond interest rate of 8% per year payable semiannually, and a maturity date of 20 years from now.If a person purchases the bond for $9000 when the interest rate in the market place is 8% per year compounded semiannually, the size and frequency of the interest payments the person will receive are:a. $270 every six monthsb. $300 every six monthsc. $360 every six monthsd. $400 every six months

A corporate bond has a face value of $10,000, a bond interest rate of 8% per year payable semiannually, and a maturity date of 20 years from now.If a person purchases the bond for $9000 when the interest rate in the market place is 8% per year compounded semiannually, the size and frequency of the interest payments the person will receive are:a. $270 every six monthsb. $300 every six monthsc. $360 every six monthsd. $400 every six months

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 5P

See similar textbooks

Similar questions

Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
You purchase a $10,000 bond with a bond rate of 6% per year payable semiannually for 2 years. You pay $9,600 for the bond. Which statement is correct?
The saleemi corporation’s $1,000 bonds pay 6 percent interest annually and have 11 years until maturity. You can purchase the bond for $875. A. What is the yield to maturity on this bond? B. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? A. The yield to maturity on the saleemi bonds is Round to two decimal places
Assume a $1000 bond issue at the rate of 10% for 15 years. a)What is the interest payment for this bond annually b)What is the interest payment on semi-annually c)How much should the investors pay for this bond i.e. the value
The saleemi corporation’s is $1,000 bonds pay 9 percent interest rate annually and have 9 years until maturity. You can purchase the bond for $935. A. What is the yield to maturity on this bond? B. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 9 percent ? A. The yield to maturity on the saleemi bonds is Round to two decimal places
You intend to purchase a 9-year, $1,000 face value bond that pays interest of $65 every 6 months. If your nominal annual required rate of return is 11.6 percent with semiannual compounding, how much should you be willing to pay for this bond? $1,106.94 $1,076.94 $1,086.94 $1,096.94 $1,066.94
2. DEF Company will issue $8,000,000 in 10%, 10-year bonds when the market rate of interest is 7%. Interest is paid semiannually. Required: a. Will this interest structure result in a Premium for DEF company or a Discount? b. How much cash will be received from the issuance of the bond? c. How much will the semi-annual interest payment be on the bond?
The Saleemi Corporation's $1000 bonds pay 7 percent interest annually and have 14 years until maturity. You can purchase the bond for $1,095. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 4 percent? ___________________________________________________________________________a. The yield to maturity on the Saleemi bond is ____ %. (Round to two decimal places.)
Lloyd's of London is selling a perpetual bond that will provide the bondholder with $100 / year forever. The first payment is one year from now. Assuming an interest rate of 5%, what is the value of this bond? a) $2,000 b) $5,000 c) $2,200 d) $4,400
The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 14 years until maturity. You can purchase the bond for $1,085. What is the yield to maturity on this bond?