QUESTION FOURA. Telemundo Ltd. borrows K100, 000 from AB bank. The loan is to be repaid in 3years with periodic payments made at the end of each year. The lender charges20% interest per annum. Construct an amortization schedule for the firstTHREE (3) repayments on this loan.B. Madison General Insurance Ltd. has issued a K155, 000 par value bond with acall provision. The 5-year bond has a coupon rate of 10%. Suppose the bondwas 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. Findthe Current Yield (CY)?

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Answered: QUESTION FOUR A. Telemundo Ltd. borrows…

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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QUESTION 1 UMass Boston issued bonds to pay for the construction of the residencce halls. One of their bond issues pays a coupon of $43.76 twice a year. What is the coupon rate? Answer as a percent. QUESTION 2 What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Coupon Rate Bond City of Somerville ? Yield 4.4% Price $990.90 t 18
QUESTION FIVE You have enough money to buy 100, $1,000, 5 year, 8% government bonds that pay interest semi-annually for a price of $954 per bond. You can get 8.5% a year if you deposit your funds for 5 years with a major bank. What should you do? What is the YTM of the bond?
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Problem 3: Straight Bonds ABC Corporation plans to issue a 9%, 10-year, P5,000,000 face value bonds. It will incur P500,000 as underwriting fee. What is the cost of the bond based on the following methods?1. Yield-to-maturity formula 2. Trial and error method (closest percent, 3 decimal places)
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A borrower and lender agree on a negative-amortizing loan in the amount of $300,000 at 4% interest for 30 years. The amount due at maturity will be $350,000. Calculate the loan balance after 20 years. $324,694.82 O $350,000.00 $326,422.53 1.461.68
Question 4 1 Computing Bond Issue Price Abbington Inc. issues $140,000 of 9% bonds that pay interest semiannually and mature in 10 years. Compute the bond issue price assuming that the prevailing market rate of interest is: Note: Round your answer to the nearest whole dollar. a. 8% per year compounded semiannually. $0 b. 10% per year compounded semiannually. $0
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 9 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 Required: Required 1 to 3 Cash Paid Required 4 $70 70 70 Interest Expense Amortization $15 17 19 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $87, (c) $17, and (d) $981. Complete this question by entering your answers in the tabs below. 3. Bonds payable year 1 3. Bonds payable year 2 $85 87 89 Balance $949 964 981…
Issue Price The following terms relate to independent bond issues: a. 610 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments b. 610 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments c. 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments d. 1,880 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Use the appropriate present value table: PV of $1 and PV of Annuity of $1 Required: Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar. Situation Selling Price of the Bond Issue а. 563,752 b. 562,897 %24 C. d.

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