Assume that three years ago, you purchased a 10-year corporate bond that pays 9.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 8 percent. a ) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 8 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value? multiple choice 1 Decreased in value. Increased in value. c-2) Why did the bond increase or decrease in value? multiple choice 2 Because market rates decreased. Because market rates increased.
Assume that three years ago, you purchased a 10-year corporate bond that pays 9.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 8 percent. a ) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 8 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value? multiple choice 1 Decreased in value. Increased in value. c-2) Why did the bond increase or decrease in value? multiple choice 2 Because market rates decreased. Because market rates increased.
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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am. 119.
Transcribed Image Text:Assume that three years ago, you purchased a 10-year corporate bond that pays 9.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 8 percent. a
) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are
paying 8 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did
the bond increase or decrease in value? multiple choice 1 Decreased in value. Increased in value. c-2) Why did the bond increase or decrease in value? multiple choice 2 Because market rates
decreased. Because market rates increased.
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