Albert purchased a bond with exactly 20 years to redemption. The bond pays annual coupons, in arrears, of 5% per annum and is redeemed at par. Albert, who is not liable to pay tax, will obtain a gross redemption yield of 6% per annum if he holds the bond utill redemption. Calculate the purchase price Albert paid for the bond, per $100 nominal if his intention was to hold the bond utill redemption.

Albert purchased a bond with exactly 20 years to redemption. The bond pays annual coupons, in arrears, of 5% per annum and is redeemed at par. Albert, who is not liable to pay tax, will obtain a gross redemption yield of 6% per annum if he holds the bond utill redemption. Calculate the purchase price Albert paid for the bond, per $100 nominal if his intention was to hold the bond utill redemption.

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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Similar questions

Denis purchased a $10,000 face value Ontario Hydro Energy bond maturing in four years. The coupon rate was 6.8% payable semiannually. If the prevalling market rate at the time of purchase was 6.1% compounded semiannually, what price did Denis pay for the bond? (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Assume that: • Bond interest is paid semiannually. . The bond was originally issued at its face value. • Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually. Coupon Payment Bond price
Quinn purchases a bond for $29,000 when the market interest rate is 13% per year, compounded semiannually. The bond has an interest rate of 10% per year payable semiannually and a maturity date of 24 years. What is the face value of this bond? (Hint: Solve for C = Z given Vy= $29,000)
Assume that Peter purchased a 25-year, 7.24 percent coupon (annual payments) bond at par ($1,000). He sold the bond after 4 years for $1,095.55. He reinvested the coupon payments at the 4.75 percent compounded annually. Calculate the bond's total yield.
Stacy purchases a $60,000 bond for $57,500. The coupon rate is 6% per year payable quarterly. The bond has a 15 year life, at which time it is cased in for face value. The bank's interest is 4.8% per year compounded monthly. Stacy decides to sell the bond at the end of 8 years. What is the bond value at this time? work in terms of excel
Toby purchased a 20-year bond which pays semiannual coupons of 8%. The par value is 1,000 and the purchase price was 812.77. The bond is redeemable at 110% of par. What is the yield to maturity (expressed as a nominal, semi-annual rate) Toby received if the bond was held to maturity?
Bones Ely owns a $1,000 face-value bond with three years to maturity. The bond makes annual interest payments of$75, the first to be made one year from today. The bond is currently priced at $975.48. Given an appropriate discount rate of 10%, should Bones hold or sell the bond?
Jack purchases a 30-year bond with par-value F. The bond matures at par-value and pays semiannual coupons at an annual nominal rate of 5% compounded semiannually. The first coupon payment comes six-months after the date of purchase. The bond is priced to yield an annual rate of 6% compounded semiannually. 10 years and 3 months after purchasing the bond, Jack sells the remaining bond payments for 35453 which is 10% higher than the bond's clean price at that time. Find F
Shannon purchases a bond for $952.00. The bond matures in 3 years, and Shannon will redeem it at its face value of $1,000. Coupon payments are paid annually. If Shannon will earn a yield of 12%/year compounded yearly, what is the bond coupon rate?
Mukesh purchased a $2,000 face value bond on January 2, 2022 for $2,000. The bond was issued on the same date and the maturity date of Bond is 5 years. Interest is payable at 6% compounded semi-annually on uncashed coupons on each of June 30 and December 31 at the investor’s option. REQUIRED: Assume Mukesh does not exercise his option to receive any cash interest before maturity, What amount of income will Mukesh have to include in 2022 and 2023.
Mr. Weber purchases a $4000 bond, that pays interest at 12-5% and is redeemable at 95 in 12 years. He bought the bond at a price to yield j13-10.25% it held until maturity. After 6 years, he sells the bond to another investor who will yield 2-10.05% if held until maturity. Approximate Mr. Weber's yield on his investment over the 6-year period, using method of averages? Answer
Mark buys a 10-year bond of face (and redemption) amount of $1000, with 10% annual coupons at a price to yield an annual effective rate of 10%. The coupons are immediately reinvested at an annual effective rate of 8% once received. Immediately after receiving and reinvesting the 4th coupon, Mark sells the bond to Jeno for a price that will yield an annual effective rate of 12% to Jeno. Calculate the yield rate that Mark actually earns on his investment.
A man purchases a bond for $900. The bond has a face value of $1,000 and pays semi-annual interest payments of $50 each. If the bond is paid in full after 10 years, what annual rate of return will the man receive?

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