Mark purchases a 1000 par value 10-ycar bond with 6% annual coupons which will be redeemed for R. The purchase price is 1297.33 and the present value of the redemption value is 810.68. Early redemption of Mark's bond is not allowed. Erik purchases a 1000 par value 10-year bond with 6% annual coupons which will be redeemed for R. Early redemption of Erik's bond is allowed from the beginning of the 9th year. The price of the Erik's bond is Y.

Mark purchases a 1000 par value 10-ycar bond with 6% annual coupons which will be redeemed for R. The purchase price is 1297.33 and the present value of the redemption value is 810.68. Early redemption of Mark's bond is not allowed. Erik purchases a 1000 par value 10-year bond with 6% annual coupons which will be redeemed for R. Early redemption of Erik's bond is allowed from the beginning of the 9th year. The price of the Erik's bond is Y.

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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Mr. Weber purchases a $4000 bond, that pays interest at 12-5% and is redeemable at 95 in 12 years. He bought the bond at a price to yield j13-10.25% it held until maturity. After 6 years, he sells the bond to another investor who will yield 2-10.05% if held until maturity. Approximate Mr. Weber's yield on his investment over the 6-year period, using method of averages? Answer
Toby purchased a 15-year par value bond with semiannual coupons of 3.5 and a redemption value of 110. The bond can be called at 120 on any coupon date prior to maturity, starting at the end of year 10. Calculate the maximum price of the bond to guarantee that Toby will earn an annual nominal interest rate of at least 8% convertible semiannually. O a. 102 O b. 99 O c. 97 d. 105 O e. 94
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
On May 1, 2021, Bo Smith, proud father of newborn son Bobo, purchased $200,000 in zero-coupon bonds that mature on May 1, 2041. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 9%. Interest compounds annually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:Calculate the price Bo paid for the bonds.
A.1. Which of the following are examples of simple interest, and which are examplcs of com- pound interest? (a) Jones bays a bond for $1.000, raseives acheck for $60 every ycar until the bond's mna- turity, and then receives $1,000. (b) Jones deposits $1,000 in savingsccount bearing 6 percent interest. He makes no with- drawals for a period of 10 years. At the cnd of this ocriod he closes the account and re- ceives S1,791.
Louis bought a $100 par value 5-year bond with 10% semiannual coupons ata purchase price of $94. After receiving the 5th coupon, Louis sold the bond to Raymond. Find the yield to maturity for Raymond, if the realized yieldfor Louis is 12% compounded semiannually.
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
Isabel prefers to purchase bonds that contain a sinking fund provision to protect her from any potential loss of her invested capital. She purchased a 20-year, $20,000 sinking fund bond with a 12% coupon, paid seml-annually, for $18,900. If the company calls the bond after 10 years, and the call penaity requires a payment of $30 per $1,000 of face value, what are the yeilds to maturity and yeild to call on this bond? -previous answered questions were wrong, show calculations.
Jay purchased a Treasury bond with a coupon rate of 4.49% and face value of $100. The maturity date of the bond is 15 March 2029. (b) In fact, Yuri changes his plan and Jay plans to sell this bond on 7 January 2022. What was Jay's sale price (rounded to four decimal places)? Assume a yield of 3.02% p.a. compounded half - yearly. Question Answer a. 111.6359 b 110.8412 c. 109.1924 d .108.7396
Jay purchased a Treasury bond with a coupon rate of 4.49% and face value of $100. The maturity date of the bond is 15 March 2029. (b) In fact, Yuri changes his plan and Jay plans to sell this bond on 7 January 2022. What was Jay's sale price (rounded to four decimal places)? Assume a yield of 3.02% p.a. compounded half - yearly. Question Answer a. 111.6359 b 110.8412 c. 109.1924 d .108.7396

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