Robert owns investment A and 1 bond B. The total value of his holdings is $3,040.00. Bond B has a coupon rate of 9.33 percent, par value of $1,000.00, YTM of7.83 percent, 10 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows toReg of $374.40 per year forever with the first annual cash flow expected in 1 year from today. What is the expected return for investment A?O 23.42% (plus or minus 2 bps)O 19.33% (plus or minus 2 bps)O 18.54% (plus or minus 2 bps)O 12.32% (plus or minus 2 bps)O none of the answers are within 2 bps of the correct answer

The present value of bond indicates sum of future flows of cash generated from the bonds discounted…

Answered: Robert owns investment A and 1 bond B.…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 5P

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Carlos owns investment A and 1 bond B. The total value of his holdings is $2,496.36. Investment A is expected to pay annual cash flows to Ronish of $291.00 per year with the first annual cash flow expected later today and the last annual cash flow expected in 8 years from today. Investment A has an expected return of 15.55 percent. Bond B pays semi-annual coupons, matures in 13 years, has a face value of $1,000.00, has a coupon rate of 8.52 percent, and pays its next coupon in 6 months. What is the yield-to-maturity for bond B? 4.78% (plus or minus 2 bps) 3.47% (plus or minus 2 bps) 9.57% (plus or minus 2 bps) 5.32% (plus or minus 2 bps) none of the answers are within 2 bps of the correct answer
Shannon purchases a bound for $952.00. The bond matures in 3 years, and Shannon will redeem it at its face value of $1,000. Coupon payments are paid annually. If Shannon will earn a yield of 12% year compounded yearly, what is the coupon rate on the investment?
Mathias purchases a 7-year CD for $5000 with 1.1% APR compounded monthly, and a 7-year bond for $5000 with a 4.3% coupon rate, paid annually. How much will Mathias’s original $10000 investment be worth at the end of the 7 years? Round your answer to the nearest cent.$_____________________
Vishno
Find the purchase price of each bond bought on the given dividend date. Use another sheet of paper for your solution. 1. An amortized loan of P100, 000 with an interest rate of 8% per annum will be paid quarterly for 1 years. Determine the periodic payment. Then construct the amortization schedule. 2. Dra. Saldaña bought a home theater set at P200, 000 amortized in 3 years at 6% compounded monthly. Prepare the amortization schedule.
If company A wants to raise 20-24million through bonds, and company B wants to invest in company A. In the conditions company A currently pays semi-annual interest of $100, as the bonds age for 30 years and the value is $2000per bond and interest is 16%. 1) What cash flow would need to be expected for company B to purchase the bond in the fifth and the final payment. 2)If the value of the bond was equal to $2400 should company B invest in the bond of company A. Provide all calculations and formulas used for pricing.
Ten bonds are purchased for $9,855.57. They are kept for 5 years and coupon payments are received at the end of each of the 5 years. Immediately following the owner’s receipt of the 5th coupon payment, the owner sells each bond for $50 less than its par value. The bond coupon rate is 8%, and the owner’s money yields a 10% annual return. Solve, a. Draw a clear, completely labeled cash flow diagram of the entire bond transaction using dollar amounts where they are known and using $X to represent the face value of the bond. b. Determine the face value of each bond.
Professor Kostovetsky purchases a 10-year 4%-coupon Treasury bond for its current market price of $937.23 and then holds it until maturity. What is his Net Present Value (NPV) from this investment? A. $0 B. $62.77 C. $462.77 D. $4062.77
Bob uses 19481 to purchase a 10-year par-value bond (i.e. redeems at face-value). Coupons are paid out annually (end of the year) and each coupon is equal to 2% of the face-value of the bond. If each coupon payment is invested into an account that earns an effective annual interest rate of 2.4%, then what is the face-value of the bond if Bob realizes an overall yield of 3.36% per year effective over the 10 year period? Give your answer rounded to the nearest whole number (i.e. X).
Stacy purchases a $60,000 bond for $57,500. The coupon rate is 6% per year payable quarterly. The bond has a life of 15 years, at which time it can be cashed in for face value. If the bank's interest is 4.8% per year compounded monthly, what is the present worth of the bond?
3) Don makes a one time investment in the following way: he purchases a 30 year, $5, 000 face value bond with semiannual coupons, and with a semianmual 4% coupon rate and a semianmual 6% yield rate. Immediately after receiving his coupons, he invests his coupons into an account earning a nominal semiannual interest rate of i) = 3%. Find how much is in the account after 30 years and find Don's nominal annual yield rate over the 30 year period.
Mark Motel's debt has a face value of $40 million, a coupon rate of 14% (paid semiannually), and expires in 12 years (at t = 12 . The current annual yield-to-maturity (stated) for all bonds of the company is 15%. Mark wishes to conserve cash for the next few years. To do this, Mark decides to issue new equity and use the proceeds to purchase the existing debt at the market price. The current stock price of Mark is $60 and there are 2 million shares outstanding. 1. How many shares should Mark issue to purchase the existing debt? Assume the decision to purchase the bond does not change the stock price. Instead, the company decides to issue a zero-coupon bond that matures at year 5, and use the proceeds to purchase the existing debt at the market price. 2. What is the face value of the zero-coupon bond that Mark needs to issue?

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