An investor who pays income tax at 20%, but no CGT buys a 15-year bond to be redeemed at 105%, bearing semi-annual coupons of 10% pa. (a) Calculate the price pe $100 nominal to give a yield of 9% pa effective. (b) Just after the 20th coupon payment, the income tax rate changes to 15%. If the investor holds the bond to redemption, calculate the realised yield on the whole transaction.

Q: Bonds sell for $1,150, they have a 6.75% annual coupond and 15 year maturity and callable in 6 years…

A: Nper = 15 Years (Yield to maturity) Coupon rate = 6.75% PMT = 1000*6.75%= 67.50 (coupon amount) Pv=…

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Q: Fingen's 12-year, $1000 par value bonds pay 11 percent interest annually. The market price of the…

A: Bond valuation:The process of estimating a bond's fair market value by computing the present value…

Q: You are considering a 10-year, $1,000 par value bond. Its coupon rate is 9%,and interest is paid…

A: N = 20 semi annual periods Par Value = 1000 Coupon = Coupon Rate / 2 * Par Value = 9%/2* 1000 = 45…

Q: You are considering a 10-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid…

A: PRICE OF BOND FORMULA: price of bond=coupon×1-11+rnr+par1+rn where, r= rate per period n=number of…

Q: You buy a​ ten-year $1,000 par value​ zero-coupon bond. The YTM is​ 6%. You are planning to hold the…

A: Given Face value - $1000 zero-coupon bond YTM is​ 6% period - 10 years tax rate = 34%

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Q: newly issued 10-year maturity, 6% coupon bond making annual coupon payments is sold to the public at…

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Q: he nominal rate of return is ______% earned by an investor in a bond that was purchased for $906,…

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Q: If a 5 year annual bond with a 6% coupon rate, currently priced at $988 and par value is $1000, what…

A: Borrowings are the liability of the company which is used to finance the requirement of the funds.…

Q: You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You…

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Q: Mr. Smith wishes to sell a bond that has a face value of $1,000. The bond bears an interest rate…

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A: N = 12 years Coupon Rate = 6.2% Price = 1000 Face Value = 1000

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Q: • What is the value of a 6%, 10-year bond with a redemption value of $20,000 that pays dividends…

A: The value for the bonds would be considered on the basis of interest rate that is being compounded…