Denis purchased a $10.000 face value Ontario Hydro Energy bond maturing in four years. The coupon rate was 8% payablesemiannually. f the prevailing market rate at the time of purchase was 74% compounded semiannually, what price did Denis pay forthe bond? (Do not round the intermediete calculations. Round your final answer to 2 decimal places)Assume that• Bond interest s paid semiannuallyThe bond was originallyissued at its face value· Bonds are redeemed at their face value at maturityMarket rates of return are compounded semiannuallyBond price

Bond:- It is the loan that is taken by companies and the government from investors instead of banks.…

Answered: Denis purchased a $10.000 face value…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mini Lop, Inc. paid $350,000 to retire a bond with a face value of $300,000. The note was issued with an 8% coupon rate paid semi-annually. The note was four years from maturity and had a carrying amount of $340,000. What is the net gain or loss on the redemption of the note? Group of answer choices a. $50,000 loss b. $40,000 loss c. $40,000 gain d. $10,000 loss e. The provided answers are incorrect
Problem: 5-year, P10,000 Debenture bond, 10% p.a. interest payable annually is offered to Joy at 98. At the time the bond is offered to Joy, it has 3 years remaining life. Joy wants a required rate of return of 12% Required: a. What is the value of the bond if the required rate of return of Joy is 12% p.a. Should Joy purchase the bond? b. What is the value of the bond if the required rate of return of Joy is 8% p.a. Should Joy purchase the bond? c. What is the value of the bond if the required rate of return of Joy is 10% p.a. Should Joy purchase the bond? Comment on the results of your computation above.
Jessica bought a bond on December 1st. The bond was issued on January 1st. The semi-annual coupon is 7% (S1, 000 par). What is the coupon amount Jessica will next receive and how much accrued interest will Jessica pay? Interest to Jessica on 1/1 is $35 and accrued interest when the trade is placed is $29.17 Interest to Jessica on 1/1 is $5.83 and accrued interest when the trade is placed is $29.17 Interest to Jessica on 1/1 is $35 and accrued interest when the trade is placed is S5.83 Interest to Jessica on 1/1 is $70 and accrued interest when the trade is placed is S58.34
A $9,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Erin purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 3 years, then sold it when the market interest rate was 4.25% compounded semi-annually. a. What was the purchase price of the bond? b. What was the selling price of the bond? c. What was Erin's gain or loss on this investment?. Please explain all three subparts. I will really upvote
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A client owns a $1,000 10-year bond. The coupon rate is 6 percent. The client acquired the bond three years ago at a discount. What is knwon about the interest rates three years ago? A. The stated rate was less than 6 percent. B. The stated rate was more than 6 percent. C The market rate was less than 6 percent. D. The market rate was more than 6 percent.
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An investor buys a $1,000, 20 year 6 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 11 percent. How much did the investor lose on the purchase of the bond?
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Lydia just purchased a Treasury bond for $101.68 at a yield rate of j2=6.94% p.a. The duration of Lydia's bond is 3.0639 years. Using the bond price sensitivity formula, calculate the change in price of Lydia's bond that would result from an increase in the yield rate (2) of 49 basis points. Round your answer to four decimal places. (The values below are all in dollars.) a. -0.7377 O b. -0.7137 O c. -1.4275 d. -1.4753
Please show full work and do not use Excel or Financial Calculator (The Lo Sun Corporation offers a 6% bond with a current market price of $875.05. The yield to maturity is 7.34%. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? A. 16 years B. 18 years C. 24 years D. 30 years E. 32 years

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