Question 6Municipal bonds were issued with a face value of $100,000 and a coupon rate of 0.15% perquarter, and coupon payments are quarterly. This bond is bought in the bond market beforematuration, and there are only 14 payments remaining. The first coupon payment of this bond isdue today and the next payment is due after three months (one quarter), which you will beentitled to receive if you buy this bond now. What is the maximum amount you should pay forthis bond today? As an investor, you wish to earn 2.5% compounded daily. Consider firstcalculating the quarterly effective interest rate for this investor. The coupon rate can be used tocalculate recurrent revenues from this bond which will be coupon rate times its face value.*Assume that a quarter is 90 days

In this we to find value of bond as present value of coupon payments plus present value of par…

Answered: icipal bonds were issued with a face…

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 bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $1,044. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. The bonds have a par value of $1,000. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total real return %
Jimmy has a bond with a $1,000 face value and a coupon rate of 8.25% paid semiannually. It has a five-year life. If investors are willing to accept a 12 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? Show your work. What is the impact of paying interest semi-annually rather than annually? Explain.
I would like to understand how to solve this in Excel. Hardware Inc. bonds are selling in the market for $960.45. These bonds carry a 9 percent coupon paid semiannually, and have 15 years remaining to maturity. What is the capital gain yield assuming that the interest rates will remain constant over the year?
You want to receive $5,000 per month in retirement. If you can earn 0.8% return per month and you expect to need the income for 28 years, how much do you need to have in your account at retirement? $582,032 $589,511 $596,123 $575,298 A firm has issued a bond. The bond has a 6% coupon, paid semiannually, a current maturity of 15 years, and sell for $1,273.8. The firm’s marginal tax rate is 21%. What’s the firm’s after-tax component cost of debt? 3.62% 2.86% 6.00% 12%
Book and liquidation value The balance sheet for Gallinas Industries is as follows, . Additional information with respect to the firm is available: 1. Preferred stock can be liquidated at book value. 2. Accounts receivable and inventories can be liquidated at 91% of book value. 3. The firm has 10,000 shares of common stock outstanding. 4. All interest and dividends are currently paid up. 5. Land and buildings can be liquidated at 115% of book value. 6. Machinery and equipment can be liquidated at 72% of book value. 7. Cash and marketable securities can be liquidated at book value. - X Data Table Given this information, answer the following: Gallinas Industries Balance Sheet December 31 a. What is Gallinas Industries' book value per share? b. What is its liquidation value per share? Assets Liabilities and Stockholders' Equity a. Gallinas Industries' book value per share is $ (Round to the nearest Cash 2$ 30,000 Accounts payable 2$ 46,530 Marketable securities 46,530 Notes payable 41,360…
Bill Magness wants to purchase ERCOT bonds which are maturing in 15 years and yielding 3.87%. These ERCOT bonds have an annual coupon rate of 4.59% and a par value of $5,000. If the ERCOT bonds pay coupons twice per year, how much will Bill Magness have to spend to purchase one ERCOT bond? Note: the next coupon will be paid in exactly 6 months. a. $5,514.90 b. $5,406.76 c. $5,677.10 d. $5,190.49 e. $5,028.29
3. You own several bonds and as an astute investor, you keep track of your interest payments (also known as coupon payments or cash flows). Annually, you receive a fixed total of interest payments of $2,000 per year from these bonds for the next 5 years and your required rate of return is 7.5%. What is the current value of your bond investment? Show your work and explain your answer.
You have just purchased a 10-year bond with a 6.375% coupon rate, coupons paid annually, with a YTM of 8%. Face value is $1000. Moments after you purchase this bond, the Federal Reserve Open Markets Committee announces that they will cut interest rates by 1%. By what percentage will your bond increase in value? Since this is basically an instantaneous change, assume that NPER = 10 in all y ****NOTE 7.18 is INCORRECT -- redoing this with HPR formula, i get 15.44, is this correct? **** I your calculations.
Please provide complete step by step asnwer: You purchased an annual interest coupon bond one year ago that had six years remaining to maturity at that time. The coupon interest rate was 10%, and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 7.82%. C) 8.00%. D) 11.95%. E) None of the options are correct.
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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