QUESTION FOUR A. Telemundo Ltd. borrows K100, 000 from AB bank. The loan is to be repaid in 3 years with periodic payments made at the end of each year. The lender charges 20% interest per annum. Construct an amortization schedule for the first THREE (3) repayments on this loan. B. Madison General Insurance Ltd. has issued a K155, 000 par value bond with a call provision. The 5-year bond has a coupon rate of 10%. Suppose the bond was called after 3 years. Find the YTC if the call premium is 10% of par value. C. If a bond issued at par was selling for K900 and paid a coupon of K100. Find the Current Yield (CY)?
QUESTION FOUR A. Telemundo Ltd. borrows K100, 000 from AB bank. The loan is to be repaid in 3 years with periodic payments made at the end of each year. The lender charges 20% interest per annum. Construct an amortization schedule for the first THREE (3) repayments on this loan. B. Madison General Insurance Ltd. has issued a K155, 000 par value bond with a call provision. The 5-year bond has a coupon rate of 10%. Suppose the bond was called after 3 years. Find the YTC if the call premium is 10% of par value. C. If a bond issued at par was selling for K900 and paid a coupon of K100. Find the Current Yield (CY)?
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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Transcribed Image Text:QUESTION FOUR
A. Telemundo Ltd. borrows K100, 000 from AB bank. The loan is to be repaid in 3
years with periodic payments made at the end of each year. The lender charges
20% interest per annum. Construct an amortization schedule for the first
THREE (3) repayments on this loan.
B. Madison General Insurance Ltd. has issued a K155, 000 par value bond with a
call provision. The 5-year bond has a coupon rate of 10%. Suppose the bond
was called after 3 years. Find the YTC if the call premium is 10% of par value.
C. If a bond issued at par was selling for K900 and paid a coupon of K100. Find
the Current Yield (CY)?
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