A $1,000 par value bond was issued 25 years ago at a 9.00 percent coupon rate, paid semiannually. Itcurrently has 20 years remaining to maturity. Interest rates on similar debt obligations are now 6percent. (Use a Financial calculator to arrive at the answers.)a. What is the current price of the bond? (Round the final answer to 2 decimal places.)Price of the bond$b. Assume Igor Sharp bought the bond three years ago, when it had a price of $1,025. What is hisdollar profit based on the bond's current price? (Round the final answer to 2 decimal places.)Dollar profitc. Further assume Igor Sharp paid 20 percent of the purchase price in cash and borrowed the rest(known as buying on margin). Igor used the interest payments from the bond to cover the interestcosts on the loan. How much of the purchase price of $1,025 did Igor Sharp pay in cash?Purchase priced. What is Igor's percentage return on his cash investment? Divide the answer to part b by the answerto part c. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)Percentage return%

Price of Bond is the present value of coupon payment plus present value of the par value of bond…

$1,000 par value bond was issued 25 years ago at a 9.00 percent coupon rate, paid se urrently has 20 years remaining to maturity. Interest rates on similar debt obligations are ercent. (Use a Financial calculator to arrive at the answers.) What is the current price of the bond? (Round the final answer to 2 decimal places.) rice of the bond . Assume Igor Sharp bought the bond three years ago, when it had a price of $1,025. Wh ollar profit based on the bond's current price? (Round the final answer to 2 decimal pla ollar profit Further assume Igor Sharp paid 20 percent of the purchase price in cash and borrowed nown as buving on margin). Igor used the interest payments from the bond to cover the

$1,000 par value bond was issued 25 years ago at a 9.00 percent coupon rate, paid se urrently has 20 years remaining to maturity. Interest rates on similar debt obligations are ercent. (Use a Financial calculator to arrive at the answers.) What is the current price of the bond? (Round the final answer to 2 decimal places.) rice of the bond . Assume Igor Sharp bought the bond three years ago, when it had a price of $1,025. Wh ollar profit based on the bond's current price? (Round the final answer to 2 decimal pla ollar profit Further assume Igor Sharp paid 20 percent of the purchase price in cash and borrowed nown as buving on margin). Igor used the interest payments from the bond to cover the

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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You purchased a $20,000 bond when there was 17 years to maturity. The bond has a coupon rate of 4.48 %. At the time of purchase the yield to maturity was 2.98%. How much did you pay for the bond? Enter your answer in blank #1. (Round) your answer to 2 decimal places and include the $ sign. Enter your answer in the form $1,234.56.) • Was the bond purchased at a premium or a discount? Enter "premium" or "discount" in blank #2. • What was the amount of premium or discount on the bond? Enter your answer in blank #3. (Round your answer to 2 decimal places and include the $ sign. Enter your answer in the form $1,234.56.) Blank #1 Blank #2 Blank # 3
you bought a 30-year bonds many years ago. The bond has par value of $ 1,000 and coupon rate of 12%, paid semi-annually. The current price of the bond is $1,137.99 and the yield to maturity is 10%. How many years ago did yoy buy the bond Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure
You are offered an 6 year bond issued by Fordson, at a price of $943.22. The bond has a coupon rate of 9% and pays the coupon semiannually. Similar bonds in the market will yield 10% today. Do you buy the bonds at the offered price? Yes the bond is offered at a premium. O No, the bond offered is worth less than $943.22. Yes, the bond offered is being sold at a discount. O There is not enough information to determine.
еВook Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. a. What is the yield to maturity at a current market price of 1. $822? Round your answer to two decimal places. % 2. $1,107? Round your answer to two decimal places. % b. Would you pay $822 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if ra = 13%? I. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. II. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. III. You would buy the bond as long as the yield to maturity at this price is less than your required rate of return. IV. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. You would not buy the bond as long as the yield to maturity at this price is…
Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. a. What is the yield to maturity at a current market price of 1. $8257 Round your answer to two decimal places. % 2. $1,142? Round your answer to two decimal places. b. Would you pay $825 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13%? 1. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. II. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return. III. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. IV. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. V. You would buy the bond as long as the yield to maturity at this price is less…
Five years ago, you purchased a $1,000 par value corporate bond with an interest rate of 5 percent. Today, comparable bonds are paying 7 percent. What is the approximate dollar price for which you could sell your bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) D Approximate market value.
Consider a bond issued by MGM Inc. exactly two years ago. At that time the bond’s time to maturity was 30 years. The bond pays semiannual coupons with the coupon rate of 6% per year. The face value of the bond is $1000. a. What is the bond’s price today, if today’s market interest rate for bonds of comparable maturity and default risk is 8% per year? b. You would like to speculate and believe that tomorrow the market interest rate for comparable bonds would decrease to 5%, would you buy or sell short this bond today? c. Suppose that exactly two years from today the price of the bond will be $900, what is the annual YTM at that time? Please explain without using excel
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.6% (annual payments). The yield to maturity on this bond when it was issued was 5.7%. What was the price of this bond when it was issued? www When it was issued, the price of the bond was $. (Round to the nearest cent.)
ELECTRON Computers just issued a bond that matures in 8 years. Its par value is equal to $1,000 and its coupon rate is equal to 7.5%. Interest payments are made annually. The yield to maturity on the bond is 7%. a. This type of bond is called: OYield bond OCoupon bond ODiscount bond b. Calculate the value of the coupon payment. Coupon payment = $ c. Calculate the value of the bond today. Use two decimal places and report a positive number. VB = $
An insurance company is analyzing the following three bonds, each with five years to maturity, annual interest payments, and is using duration as its measure of interest rate risk. What is the duration of each of the three bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. $10,000 par value, coupon rate=9.7%, r 0.17 b. $10,000 par value, coupon rate 11.7%, r= 0.17 c. $10,000 par value, coupon rate = 13.7%, p=0.17 Duration of the bond years
A municipal bond with a coupon rate of 2.4 percent has a yield to maturity of 3.4 percent. Assume a face value of $5,000. If the bond has 15 years to maturity, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.2% when the market interest rate is 5.2%. You sell the bond one year later after the market interest rate falls to 3.2%. The rate of return earned on the bond during the year was%. (Round your response to two decimal places.)

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