3John purchased a $20,000 20-year bond at a 2% dis-count. It pays semiannually at a rate of 4% per year.If he wishes to make 6% per year on his investment,the semiannual dividend he will receive is

In case of bond interest is payable annually, semi annually as per initially agreed, but it is…

Answered: John purchased a $20,000 20-year bond…

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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Mario has agreed to purchase his partner’s share in the business by making payments of $1200 every three months. The agreed transfer value is $17 850, and interest is 9.5% compounded annually. If the first payment is due at the date of the agreement, what is the size of the final payment?
Please show detailed steps and correct
Bill purchased a $10,000 municipal bond at a discount for $9,500 four years ago. The bond 6) rate is 6% per year compounded quarterly. Currently there is a buyer who has offered Bill $10,300 for the bond. Bill wishes to earn 8% per year compounded quarterly on the bond investment that he has held for 4 years. Should Bill sell the bond? Explain. "Show all work.
Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available to him: • Account 1 pays 4.00% for year 1, 5.00% for year 2, 8.00% for year 3, 9.00% for year 4, and 10.00% for year 5, all with annual compounding. • Account 2 pays 10.00% for year 1, 9.00% for year 2, 8.00% for year 3, 5.00% for year 4, and 4.00% for year 5, all with annual compounding. • Account 3 pays interest at the rate of 7.17490% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? No alternative is better than the others Year 5 Balance, Alternative 1: $ 126 Year 5 Balance, Alternative 2: $ 126 Year 5 Balance, Alternative 3: $ 126 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.
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Charlie has $14,000 to invest for a period of 5 years. The following three alternatives are available to him: • Account 1 pays 6.00% for year 1, 9.00% for year 2, 11.00% for year 3, 13.00% for year 4, and 15.00% for year 5, all with annual compounding. • Account 2 pays 15.00% for year 1, 13.00% for year 2, 11.00% for year 3, 9.00% for year 4, and 6.00% for year 5, all with annual compounding. • Account 3 pays interest at the rate of 10.75576% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Alternative 2 Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 3: $ 3.123.14 4.380.38 1506
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John purchased a $20,000 20-year bond at a 2% dis- count. It pays semiannually at a rate of 4% per year. If he wishes to make 6% per year on his investment, the semiannual dividend he will receive is