On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%. The purchase price was 87.875, and the commission was $7 per bond. Bonds from this particular company pay interest on February 1 and August 1. (a) What is the current yield (as a %) of the bond as of the purchase date? (Round your answer to one decimal place.) % (b) What is the total purchase price (in $) of the bonds? (Round your answer to the nearest cent.) 24 (c) If Wayne sold the bonds on November 1 for 92.875, what are the proceeds (in $) from the sale? (Round your answer to the nearest cent.) 24

On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%. The purchase price was 87.875, and the commission was $7 per bond. Bonds from this particular company pay interest on February 1 and August 1. (a) What is the current yield (as a %) of the bond as of the purchase date? (Round your answer to one decimal place.) % (b) What is the total purchase price (in $) of the bonds? (Round your answer to the nearest cent.) 24 (c) If Wayne sold the bonds on November 1 for 92.875, what are the proceeds (in $) from the sale? (Round your answer to the nearest cent.) 24

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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The Pennington Corporation issued a new series of bonds on January 1, 1978. The bonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, on December 31, 2007. Coupon payments are made semiannually (on June 30 and December 31). What was the YTM of Pennington’s bonds on January 1, 1978? 2. What was the price of the bond on January 1, 1983, 5 years later, assuming that the level of interest rates had fallen to 10 percent? 3. Find the current yield and capital gains yield on the bond on January 1, 1983, given the price as determined in part b. 4. On July 1, 2001, Pennington’s bonds sold for $916.42. What was the YTM at that date? 5. What were the current yield and capital gains yield on July 1, 2001?
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