In 5 years Sonia requires $100,000 to fund the down payment on a cottage. Sonia is very risk adverse. Which of the following bonds should she buy? O a) None of these answers A five year BBB credit rated 8% semi-annual coupon bond maturing in b) 5 years trading at 104. c) A five year BBB credit rated strip coupon bond (i.e., zero-coupon bond) maturing in 5 years. A five year Government of Canada 8% semi-annual coupon bond d) maturing in 5 years trading at 104. e) A five year Government of Canada strip coupon bond (i.e., zero-coupon bond) maturing in 5 years.

In 5 years Sonia requires $100,000 to fund the down payment on a cottage. Sonia is very risk adverse. Which of the following bonds should she buy? O a) None of these answers A five year BBB credit rated 8% semi-annual coupon bond maturing in b) 5 years trading at 104. c) A five year BBB credit rated strip coupon bond (i.e., zero-coupon bond) maturing in 5 years. A five year Government of Canada 8% semi-annual coupon bond d) maturing in 5 years trading at 104. e) A five year Government of Canada strip coupon bond (i.e., zero-coupon bond) maturing in 5 years.

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 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
The original holder of a $10,000 Province of Manitoba bond issued December 1, 2006, with a 2% coupon and 30 years to maturity sells her bond on June 1, 2010, when market rates were 5.25%. By what amount did the market price increase or decrease for this investor? (The answer is $4,622.62 but I need help with the process. Thank you in advance!)
5. In order to purchase a 1000 par value 10 year bond, yielding an annual nominal rate of 8% compounded semiannually, and paying semiannual coupons at an annual nominal rate of 6%, Janet borrows money from a bank at an effective annual rate of 5%. She has to pay the amount she has borrowed plus interest in one single payment at the end of 10 years. Janet reinvests all coupon payments she receives in an account that gains interest at a nominal rate of 10% convertible semiannually. At the end of 10 years, how much remains from Janet's investment after she pays all she owes on the loan?
Four years ago, Sandra Stills bought six-year, 5.5 percent coupon bonds issued by the Oriole Corp. For $944.99 she sells these bonds at the current price of $892.26, what will be her realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. Assume face value is $1000. (Round to 2 decimal places)
answer both components PLEASE!
Kevin Rogers is interested in buying a five-year bond that pays a coupon of 8.5 percent on a semiannual basis. The current market rate for similar bonds is 6.9 percent. What should be the current price of this bond? (Do not round intermediate computations. Round your final answer to the nearest dollar.) O $1,067 O $1,099 O $965 O $982
Mickey and Minnie just bought a zero coupon bond for $597.97, but they cannot recall when it matures. The yield to maturity equals 5.2%. Can you help Mickey and Minnie? The bond's face value is $1000. (Assume annual discounting) (Enter your answer in years and round to 2 decimal places.)
Griffin's Goat Farm, Inc., has sales of $673,000, costs of $335,000, depreciation expense of $79,000, interest expense of $49,500, a tax rate of 21 percent, and paid out $43,500 in cash dividends. What is the addition to retained earnings? (Do not round intermediate calculations.)
Last year, Sally purchased a $1,000 face value corporate bond with an 11.2 percent annual coupon rate and a 12-year maturity. At the time of the purchase, it had an expected yield to maturity of 11.9 percent. If Sally sold the bond today for $949.88, what rate of return would she have earned for the past year? a. 11.02% b. 11.20% c. 11.10% d. –0.69% e. 10.51%
Ms. White has started her job and wanted to save her money in one way or other. But instead ofsaving money in the bank, she wished to invest it so that money could earn a return. She isintimidated by her friend's investment growth and decides to do the same. She decided topurchase a bond with face value $1,000. The annual coupon payment for the cond is 9%. Theinterest rate of the bond is 13% and maturity 2. She knew that the maturity levels and interestrate of the bond impact its price. So to test the same statement, she purchased 2 more bondswith the same specifications, except, one with maturity 2 and interest rate 10% while the otherwith maturity 3 and interest rate 13%. Determine the impact of change in the value of the bond.A: The bond selling price is $773.98 when interest rate decrease to 10% and $819.01 whenmaturity increases to 3.B: The bond selling price is $796.46 when interest rate decrease to 10% and $853.63 whenmaturity increases to 3.C: The bond selling price is $982.64…
A zero-coupon bond pays no interest during its lifetime. Upon maturity, the investor receives face value. The purchase price determines the rate of return. (a) Henri paid $10,750 for a $20,000 face value zero-coupon bond that matures in 10 years. Find the annual compound rate of interest received. (Round your answer to two decimal places.) % (b) Sandi plans to purchase a zero-coupon bond with a face value of $10,000 and matures in 7 years. She wants to earn 7.1% compounded annually. Find the price. she should pay. (Round your answer to two decimal places.) Additional Materials
Last year Janet purchased a $1,000 face value corporate bond with a 10% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.34 %. If Janet sold the bond today for $1,164.56, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. %

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