34. Four years ago you bought a 25-year 8.5% $1,000 bond. The bond paysinterest each 6 months. You want to sell the bond. You just receivedthe 8h semiannual interest payment of $42.50 ($1,000 x 4.25% periodicrate = $42.50).semiannually. What is your bond worth today?Similar bonds are being issued that pay 6%

We require to calculate the present value of bond in this question. We can calculate the present…

Four years ago you bought a 25-year 8.5% $1,000 bond. The bond pays interest each 6 months. You want to sell the bond. You just received the 8th semiannual interest payment of $42.50 ($1,000 x 4.25% periodic rate = $42.50). semiannually. What is your bond worth today? Similar bonds are being issued that pay 6%

Four years ago you bought a 25-year 8.5% $1,000 bond. The bond pays interest each 6 months. You want to sell the bond. You just received the 8th semiannual interest payment of $42.50 ($1,000 x 4.25% periodic rate = $42.50). semiannually. What is your bond worth today? Similar bonds are being issued that pay 6%

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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2. Suppose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 4.9%, how much is the bond worth today: a) with annual compounding b) with monthly compounding
Suppose a state of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bond is 6.4%, how much is the bond worth today?
$52,000 is invested in a 5-year fixed interest bond paying 5.5% per year. If interest is reinvested in the account, how much will the bond be worth in 5 years? Round your answer to the nearest dollar.
Suppose a Puerto Rico government bond pays $3,255.80 in 4 years at 4% interest. Calculate the present value of the bond. Determine the value of the bond assuming it will mature in 6 years at 5% interest.
You are thinking about buying a savings bond. The bond costs $54 today and will mature in 7 years with a value of $108. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)
John bought a 10-year bond for $925. The bond pays a coupon of 5 percent per year and payments are made semiannually. What is the Effective Annual Yield (EAY) on this bond? 10.67% 9.66% O 6.10% 6.30% 3.10%
You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 3 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 4% per year compounded semiannually, what will be your minimum selling price for the bond?
3. You bought a bond (par-$1,000) three years ago for $1,040. The bond is now selling for $990. It also paid $40 in interest per year (i.e., 4% coupon rate), which you reinvest in the bond. Calculate the realized rate of return (annualized) on this bond. Interest on this bond is paid semiannually.
You purchased a newly issued 7% 40-year $1,000 bond 8 years ago. The bond pays interest each six months. You incur financial difficulties and are forced to sell the bond. You have just received the 16th semiannual interest payment. The prevailing rate on similar bonds is 8.75%. What is your $1,000 bond worth today?
You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 3 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 9% per year compounded semiannually, what will be your minimum selling price for the bond? $ 13450 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.
(Bondholders' expected rate of return) Zenith Co.'s bonds mature in 8 years and pay 9 percent interest annually. If you purchase the bonds for $700, what is your expected rate of return? www Your expected rate of return is%. (Round to two decimal places.)
Ray Co.’s bonds, maturing in 3 years, pay 8 percent interest on a $1,000 face value. Interest is paid once per year. If your required rate of return is 8 percent, what is the value of the bond? Now assume that the required rate of return increased to 9%. Would you recommend investors to buy the bond? What can you conclude about the relationship between bond prices and interest rates? Assume that the modified duration of this bond is 2.60 years. If the market yield changes by 2%, how much change will there be in the bond's price in %

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