A $8,500 bond had a coupon rate of 5.25% with interest paid semi-annually. Dianapurchased this bond when there were 7 years left to maturity and when the marketinterest rate was 5.50% compounded semi-annually. She held the bond for 3 years,then sold it when the market interest rate was 5.00% compounded semi-annually.a. What was the purchase price of the bond?"Round to the nearest cent.b. What was the selling price of the bond? Round to the nearest cent.b. What was the selling price of the bond?Round to the nearest cent.c. What was Diana's gain or loss on this investment?(click to select)amount was $

The process of bond valuation involves figuring out an individual bond's hypothetical fair value. A…

Answered: A $8,500 bond had a coupon rate of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On March 1, Wayne, Michaels bought 10 bonds from a particular company with a coupon rate of 9.725%. The purchase price was 87.875 and the commission was seven dollars per bond. Buns from this particular company pay interest on February 1 and August 1. A-what is the current yield as a percent of the bond as of the purchase date round your answer to one decimal place? B- what is the total purchase price in dollars of the bond round your answer to the nearest cent? C-if Wayne sold the bonds on November 1 for 92.875 what are the proceeds and dollars from the sale round your answer the nearest cent?
A $6,500,000 issue of a 30-year bond, redeemable at par, offers 9.50% coupons payable semi-annually. The bond yields 4.50% compounded monthly. a. What was the purchase price of the bond, if it was purchased 25 years before maturity? Round to the nearest cent b. What was the amount of discount or premium on the bond? (click to select) amount is
A $9,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Erin purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 3 years, then sold it when the market interest rate was 4.25% compounded semi-annually. a. What was the purchase price of the bond? b. What was the selling price of the bond? c. What was Erin's gain or loss on this investment?. Please explain all three subparts. I will really upvote
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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Sofia purchases a $5,000 7% eight-year par-value bond with annual coupons. If held to maturity, her yield is 6.9%. The bond is callable at the end of two years for $5,300 and at the end of years five, six, and seven for $5,200. (a) Find Sofia's minimal yield for the period she holds the bond. (Round your answer to two decimal places.) % (b) If the bond is called prior to maturity, Sofia has made arrangements to have the redemption amount accumulate in her i = 5.1% savings account until the end of the eight years. What is her minimal yield for the eight-year period of the bond? (The coupons are not reinvested. Round your answer to two decimal places.) %
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You purchased a $1000 10-year bond that pays $95 annually. If current interest rates are at 9.5%, what is the present value of your bond?
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ABC Company issued a $250,000 bond at the coupon rate of 2 percent payable semi-annually. Now, the bond has a remaining life of 4 years. i. Two years from now, you bought the ABC bond when the market interest rate for a new ABC bond is 4 percent. How much did you pay for the bond? ii. You sold the bond purchased in part i. after holding it for a year, when interest rates (for bonds of similar risk as ABC's bonds) fell to 3 percent. What is the percentage gain / loss on the bond? Illustrate your answer using the bond valuation equation.
An investor buys a $1,000, 20 year 6 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 11 percent. How much did the investor lose on the purchase of the bond?
A 9 year bond with maturity value of $4300.02 and a yield rate of 4.9% was sold 18 months before maturity. If the seller earned 6% on the bond over the time that it was held, then for how much did they sell it? Give your answer rounded to the nearest cent

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