On May 1, 2024, Joe purchased $290,000 in zero-coupon bonds that mature on May 1, 2044. 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. Note: Use tables, Excel, or a financial calculator. Enter your answer rounded to the nearest whole dollar. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: Calculate the price Joe paid for the bonds.

On May 1, 2024, Joe purchased $290,000 in zero-coupon bonds that mature on May 1, 2044. 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. Note: Use tables, Excel, or a financial calculator. Enter your answer rounded to the nearest whole dollar. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: Calculate the price Joe paid for the bonds.

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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Similar questions

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On May 13, 2022, you purchased a 1000 USD par treasury note that matures on December 15, 2024. The coupon rate is 4% and price is 101. What is the accrued interest rate?
Give me answer
3 A) In January 2021 you purchased a $50,000 bond from Walmart with a 3% coupon rate and a 5-year maturity. In December of 2021, you sold this bond in the secondary market for $45,455. What was the yield on the bond that you sold? B) Assume you have obtained a summer internship 20 miles from your house and you are considering purchasing a new car using a car loan. The interest rate for the car loan is currently 3% and your roommate suggested you secure the loan now since interest rates will most definitely increase by the time summer arrives. Do you agree with her, and if so, what factors are you considering?
On April 1, 2014, Fredriksen Corp. sold a $700 million bond issue to finance the purchase of a new distribution facility. These bonds were issued in $1,000 denominations with a maturity date of April 1, 2034. The bonds have a coupon rate of 8.00% with interest paid semiannually. Required: a) Determine the value today April 1, 2024 of one of these bonds to an investor who requires a 12 percent return on these bonds. Why is the value today different from the par value? b) Assume that the bonds are selling for $925.00. Determine the current yield and the yield-to-maturity. Explain what these terms mean. c) Explain what layers or textures of risk play a role in the determination of the required rate of return on Fredriksen's bonds.
In January 2019, Cannon announced the issuance of a $1.2 billion bond. The bonds have a coupon rate of 6.0% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch. Which of the following is true? Choose all that are correct. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings. The periodic interest payment will be $36 million. The yield on these bonds would have been lower if Standard and Poor's, Moody's, and Fitch had assigned higher credit ratings. The periodic interest expense will depend on the bond's coupon rate.
You have decided to invest in Corporate bonds. Your first bond investment (on Jan 2, 2021) is par value $1,000 DEF corporation bond, with a remaining maturity of 5 years, interest is paid semi-annual, the coupon rate is 4% (annual rate) and the effective market interest is 3% (annual rate). Calculate the amount you paid for the DEF bond on January 2, 2021 Calculate the amount of interest you will receive each year from the invest. How much cash will you receive at maturity for the bond?
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.
Ac
3. On January 1, 2021, Joanna Reece paid $291,000 for bonds with a face amount of $311,000. The coupon rate of interest is 11%. The effective rate of interest is 14%. Using the effective interest method, how much interest income is recognized by Joanna in 2022 (assume annual interest payments and amortization)? (Round your answer to the nearest dollar amount.)
Please help me. Thankyou.
You bought a newly issued 10-year, $1,000 par value, 5.50% coupon bond (with semiannual coupon payments) on May 1, 2018. You decided to check the value and yields on the bond annually, so that you can keep track of your wealth. Your first check was to be done on May 1, 2019. On April 15, 2019, the yield to maturity for the bond changed to 5.20%. For your two year anniversary of owning the bond (May 1, 2020), calculate the bond's current yield, the market price of the bond, and the capital gains yeild using the new yield to maturity. Report the percentage to two decimal places

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