coupon Joseph owns investment A and 1 bond B. The total value of his holdings is $2,770.00. Bond B has 7.39 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Joseph of X per year forever with the first annual cash flow expected in 1 year from today. The expected return for investment A is 7.60 percent. What is X, the fixed annual cash flow that will be paid forever by investment A? O $128.03 (plus or minus $1) O $154.34 (plus or minus $1) O $129.99 (plus or minus $1) O $156.27 (plus or minus $1) O none of the answers are within $1 of the correct answer

coupon Joseph owns investment A and 1 bond B. The total value of his holdings is $2,770.00. Bond B has 7.39 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Joseph of X per year forever with the first annual cash flow expected in 1 year from today. The expected return for investment A is 7.60 percent. What is X, the fixed annual cash flow that will be paid forever by investment A? O $128.03 (plus or minus $1) O $154.34 (plus or minus $1) O $129.99 (plus or minus $1) O $156.27 (plus or minus $1) O none of the answers are within $1 of the correct answer

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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Q3. A company issues a $ 20,000 bond at a coupon rate of 7.5% payable semi-annually. Joan purchased this bond 10 years before maturity when the yield was 7% compounded semi-annually and sold it two years later when the bond's market yield was 8% compounded semi-annually. Calculate the gain or loss on this investment.
There are two options of investments given to an investor. Option A is a bond with face value of P100,000, 6% interest rate while the yield to maturity rate is 8%. Option B is a bond with a face value of P80,000, 14% (rounded up) interest rate while the effective rate of return is at 10%. Both investments is for 5 years and the interest income are being received annually. Which of the two investments should you choose? A. Option A B. Option B C. Either of the options D. answer not given
Mathias purchases a 10-year CD for $10000 with 2.8% APR compounded monthly, and a 10-year bond for $10000 with a 3.3% coupon rate, paid annually. How much will Mathias’s original $20000 investment be worth at the end of the 10 years? Round your answer to the nearest cent.
D $1,000 Last year Janet purchased a face value corporate bond with a 10%. annual coupon rate and a 10-year maturity. At the time of the purchase, it had an expected yield to maturity of 9,33%. If Janet sold the band fuday for $1,067.87, what rate of return would She have earned for the past year?
Company 'A' issues a bond at $1,000 and offers a payment of $50/year every year If the current market value of the bond is $935, what is the coupon rate? for 3 years. 5.35% 5% 5.5% O 6.5%
David Hoffman purchases a $1,000 20-year bond with an 8% coupon (annual payments). Yields on comparable bonds are 10%. Bob expects that two years from now, yields on comparable bonds will have declined to 9%. Find his expected yield, assuming the bond is sold in two years.
Vic Zaloom bought a corporate bond from IBEM Corporation for $100,000. The face value of the bond is $100,000 and will mature in twenty years. A $2,500 dividend is expected to be paid every quarter. If Vic plans to keep the bond until maturity, determine the effective rate of return he is getting on this investment. A. 10.38% B. 10.00% C. 12% D. 9.15%
Intal Corporation bonds have a coupon of 14%, pay interest semiannually, and mature in 7 years. Your required rate of return for such an investment is 10% annually. How much should you pay for a PhP1,000 Intal Corporation bond? *
2. An investor buys a 10 year $10,000, 8% coupon, semiannual pay bond for $9,100. He sells it three years later, just after receiving the sixth coupon payment, when its yield to maturity is 5.6%. What would be the bond price at the time of sale?
A $50 million face value bond carrying a 4.83 % coupon with 25 years until maturity is issued . The bond has a sinking fund requirement with semi - annual payments designed to retire the full face value upon maturity If the sinking fund is expected to earn 3.89 % compounded semi -annually , calculate the annual cost of the bond debt . What is the book value of the debt after 10 years

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