Harwood enterprises a large retailer of pet supplies, is about to call its 9.5% semiannual 20-Year callable bonds. The next coupon date is in 85 days. The current market price is $1,115. The Call price is $1,050. Assuming a 30/360 day count convention for accrued interest, what is the amount that investors holding the callable bonds will receive?

Harwood enterprises a large retailer of pet supplies, is about to call its 9.5% semiannual 20-Year callable bonds. The next coupon date is in 85 days. The current market price is $1,115. The Call price is $1,050. Assuming a 30/360 day count convention for accrued interest, what is the amount that investors holding the callable bonds will receive?

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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Similar questions

Commonstealth Bank issued a bond that pays a 7.20% coupon quarterly and matures at the end of September 2036. If the current market rate for similar bonds is 6.50%, what is the bond price at the end of October 2021? Show your workings and round your final answers to two decimal places.
McCue Inc.'s bonds currently sell for $1,250. They pay a $120 quarterly coupon, have a 15.5 semesters maturity, and a $1,000 par value, but they can be called in 5.25 years at $1,050. What is the difference between this bond's YTM and its YTC?
TreeTop Inc. bonds was issued on Oct 15th, 2010. The bonds have a coupon rate of 6.2%, with interest paid annually. The par value of the bonds is $1,000 and the maturity is Oct 15th, 2042. If the market price of one contract of TreeTop bond on Oct 15th, 2020 is $1,105, what is the annual interest rate to be earned by an investor who bought it on Oct 15th, 2020 at the said market price and plan to hold on to the bond till maturity? Round to the 0.01%, i.e., two decimal places. Enter your answer in the form of a percentage. For example, if your answer is "12.34%", enter "12.34".
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A Boba Drinks LLC. is considering to issue perpetual, callable bonds with a coupon rate of 5% paid annually, and a par value of $1,000. The nominal interest rate on these bonds will be 8% for the next year. Within a year, the nominal rate on the bonds will be either 12% with probability 0.7, or 9% with probability 0.3. The bonds are callable at $1400. If the bonds are called and the interest rate decreases, what is the price of the callable bond today?
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