On January 2, Year 3, JRCorp purchases a 5-year $100,000 face value, 4 percent fixed couponbond paying annual interest when market rates at issuance for comparable bonds are 5percent. The bond cost $95,671 at purchase and one year later, the market price was $94,742.Market rates most likely:Decreased by 0.5 percent.Increased by 0.5 percent.OC.Increased by 5.5 percent.O D. Decreased by 5.5 percent.A.OB.What is the calculations to derived at anincrease of 5% for market rates.

The yield to maturity is amount of return realized when bonds are held till maturity. Yield to…

On January 2, Year 3, JRCorp purchases a 5-year $100,000 face value, 4 perc bond paying annual interest when market rates at issuance for comparable bor percent. The bond cost $95,671 at purchase and one year later, the market pric Market rates most likely: OA. Decreased by 0.5 percent. B. Increased by 0.5 percent. C. Increased by 5.5 percent. D. Decreased by 5.5 percent. OD.

On January 2, Year 3, JRCorp purchases a 5-year $100,000 face value, 4 perc bond paying annual interest when market rates at issuance for comparable bor percent. The bond cost $95,671 at purchase and one year later, the market pric Market rates most likely: OA. Decreased by 0.5 percent. B. Increased by 0.5 percent. C. Increased by 5.5 percent. D. Decreased by 5.5 percent. OD.

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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A$ 25, 000, 5% bond payable semi-annually is purchased seven years before maturity. Calculate the purchase price and discount on the bond if the quoted price on the date of purchase was 95.2. O a. Purchase Pricer= $ 23, 800 Discount = $ 1, 200 O b. Purchase Price = $20, 000 Discount = $ 1, 400 %3! O . Purchase Price = $ 25, 000 Discount = $ 1,200 %3D O d. Purchase Price = $ 18, 500 Discount = $ 1, 500
On January 1, Zonoz, Inc. issued a 10-year semiannual bond with a face value of $590,000 that pays 2.5% interest. On the date of issue, the market for similar bonds was 6,0%. How much was Zonoz able to raise from issuing this bond? For numerical entries, please 1. do NOT enter commas 2. do NOT enter the dollar symbol: $ 3. DO enter the percent symbol when it is needed: % 4. enter dollar amounts to the nearest cent, for example: 12345,67 Cash Flow Diagram r=0 N Please complete the TVM Framework table to compute the amount that Zonoz was able to raise by issuing this bond. Time Value of Money (TVM) Framework C PMT FV PV CPT type n 1 What Excel function and arguments to that function would you use to compute this value? -function( rate, nper. pmt. [FV], [type]) IM
Bart's Moving Company bonds pay $50 semiannually. The bonds have a par value of $1,000 and mature in 20 years. Compute the value of Bart's Moving Company bonds if investors' required rate of return is 7.15%. O $1,197.27 O $1,933.05 O$1,300.80 O $1,082.75. N
NoleCo issues bonds on January 1, 20X1. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $800,000 and the coupon/stated rate is 10%. The market rate on the issue date is 12%. The bonds were issued for $708,241. Required: Complete the three parts below. Part A: The interest expense that NoleCo should recognize on June 30, 20X1 is: $48,000 $35,412 $42,494 $40,000 $43,146 Part B: The interest expense that NoleCo should recognize on December 31, 20X1 is: $42,345 $48,000 $43,290 $42,644 $40,000 Part C: The carrying value of these bonds on December 31, 20X1 (after the interest payment on that date) is: $800,000 $713,379 $710,735 $708,241 $714,677
Brin Company issues bonds with a par value of $590,000. The bonds mature in 5 years and pay 9% annual interest in semiannual payments. The annual market rate for the bonds is 12%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. (Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount.) Table Values are Based on: n = i = Cash Flow Table Value Amount Present Value Par (maturity) value Interest (annuity) Price of bonds
4. Oak Branch Inc. issued $100,000 of 5%, 10-year bonds when the market rate was 4%. They received $106,983. Interest was paid semi-annually. Prepare an amortization table for the first three payments. Semiannual Interest Period Semiannual Interest Expense Semiannual Interest Payment Amortization of Discount Ending Carrying Value 1 2 3 PLEASE NOTE: All dollar amounts will be rounded to whole dollars with "$" and commas as needed (i.e. $12,345).
Splish Inc. issues $3,700,000 of 7% bonds due in 12 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 10%. Click here to view factor tables What amount will Splish receive when it issues the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and final answer to 0 decimal places, eg. 458,581) Amount received by Splish when bonds were issued %24
Eveready Company issued P100,000 of 8% term bonds on January 1, 2X19, due on January 1, 2X24, with interest payable on July 1 and January 1. The company’sinvestors are willing to accept the bond at an effective- interest rate of 6%. 1. What is the present value of P100,000 bonds due in five (5) years at 6% interest payable semiannually? 2. What is the present value of P 4,000 interest payable? 3. What amount would the investors pay for that particular bond? 4. What is the premium/discount at the date of issuance? 5. Provide entry in the books of Eveready on January 1, 2X19.
If a company issues $100,000 Face Value, 10 year bonds with a contractural interest rate of 6%, which of the following situations could occur?a. Bonds will be sold at a premium when the market rate of interest is 7%b. Bonds will be sold at a discount when market rate is of interest 7%c. Bonds will be sold at face value when market rate of interest is 7%d. The issue of bonds cannot be sold when market rate is 7%
Splish Inc. issues $3,700,000 of 7% bonds due in 12 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 10%.Click here to view factor tablesWhat amount will Splish receive when it issues the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and final answer to 0 decimal places, e.g. 458,581.) Amount received by Splish when bonds were issued
On January 1 of this year, Clearwater Corporation sold bonds with a face value of $780,000 and a coupon rate of 9 percent. The bonds mature in 10 years and pay interest annually every December 31. Clearwater uses the straight-line amortization method and does not use a discount account. Assume an annual market rate of interest of 10 percent. (EY of $1. PV of $1. EVA of $1. and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1.82. Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year. 3. What bonds payable amount will Clearwater report on its December 31 balance sheet? Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.…

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