Business 123 Introduction to Investments May I please have the solutions for the following questions? Thank you, Using annual compounding, calculate the valuations for the following bonds:a) 10%, 20-year bond priced to yield 6%b) 4%, 10-year bond priced to yield 7%
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Business 123 Introduction to Investments
May I please have the solutions for the following questions?
Thank you,
Using annual compounding, calculate the valuations for the following bonds:
a) 10%, 20-year
b) 4%, 10-year bond priced to yield 7%
Step by step
Solved in 2 steps with 2 images
- Business 123 Introduction to Investments May I please have the solution for the following questions? Thank youBusiness 123 Introduction to Investments May I please have the solutions for the following questions? Thank youa. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
- Please answer in typing format8 Assume an investor purchases bonds at a premium the bonds are to be held as a long-term investment which of the following statement is true regarding the amount of bond interest revenue to be reported over life of the bonds? Group of answer choices The periodic amount of bond interest revenue will always be less than the periodic amount of cash received The periodic amount of bond interest revenue will always be above the periodic amount of cash received for interest The periodic amount of bond interest revenue will always be equal to the periodic amount of cash received The pattern of the periodic amt. of bond interest rev. is an increasing amount2 parts a-c
- aj.4Pls provide step by step answer26. Assume an investor purchases bonds at a premium the bonds are to be 1 poi held as a long-term investment which of the following statement is true regarding the amount of bond interest revenue to be reported over life of the bonds? O a. The periodic amount of bond interest revenue will always be above the periodic amount of cash received for interest O b. The pattern of the periodic amt. of bond interest rev. is an increasing amount O c. The periodic amount of bond interest revenue will always be equal to the periodic amount of cash received O d. The periodic amount of bond interest revenue will always be less than the periodic amount of cash received
- Bonds Valuation and Yield I. Two types of bonds are offered to you for bond investment considerations: P10,000, 5-year, 10% p.a. Debenture bond issued by Let's Go corp. The interest payable twice a year. The bond has four years remaining term and is offered to you at 98-1/2. □ P5,000, 10-year, 10% p.a. Mortgage bond issued by Let's Go corp. Interest is paid annually. The bond has still 7 years remaining life before its maturity. It is offered to you by a fried at 101-3/4. □ It has been your policy that your desired rate of return for unsecured investment should be 12% p,a, and for secured investment will earn a minimum of 8% p.a. Based on the above information, you would like to know the following: a. The value of the bond for the two types of bond offered. b. The exact yield to maturity (YTM) of the two bonds offered. c. Which bond you wish to invest? Why?Which investment does the equation 4 - 1800(1+0.035) represent? a) A $1800 corporate bond earning 8% compounded annually for 3.5 years b) A $1800 corporate bond earning 3.5% compounded annually for 8 years Oc) A $1800 corporate bond earning 3.5% simple interest annually for 8 years d) A $1800 corporate bond earning 0.35% compounded annually for 8 yearsQuestion content area top Part 1 Bond valuation—Semiannual interest Calculate the value of each of the bonds shown in the following table, all of which pay interest semiannually. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Bond Par Value Coupon interest rate Years to maturity Required stated annual return A $1,000 9 % 8 9 % B 1,000 13 15 12 C 100 15 6 16 Question content area bottom Part 1 The value of bond A is $______ (Round to the nearest cent.)
