Ten $10,000, 9.5% bonds with semi-annually coupons redeemable at par on March 05, 2016, were bought on May 22, 2005, to yield 7.3% compounded semi-annually. The bonds were sold on September 20, 2010, at 101.2. Find the gain or loss on the sale of the bonds without constructing a bond schedule.

Ten $10,000, 9.5% bonds with semi-annually coupons redeemable at par on March 05, 2016, were bought on May 22, 2005, to yield 7.3% compounded semi-annually. The bonds were sold on September 20, 2010, at 101.2. Find the gain or loss on the sale of the bonds without constructing a bond schedule.

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

See similar textbooks

Related questions

Q: A company issued 10%, 10-year bonds with a face amount of $100 million. The market yield for bonds…

A: Bond valuation is a method that is used to determine the theoretical value that should be assigned…

Q: 14. On November 1, 1988, what is the purchase price of a 12,000 bond with 7% converted…

A: As per the given information: Purchase price = 12000 Annual Coupon rate = 7% Annual Yield = 6%…

Q: On June 30, 2016. Cheyenne Limited issued 12.75% bonds with a par value of $790,000 due in 20 years.…

A: As per the given information: Par value of 12.75% bonds - $790,000Due in - 20 yearsIssue price -…

Q: Find the gain or loss on the sale without constructing a bond schedule for three $100 000, 5.5%…

A: Bond provides a series of coupon payment over the maturity period and, at the maturity, it also…

Q: 2. (10 points) Mazeltox Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004.…

A: A bond is a debt security representing a loan made by an investor to a borrower, typically a…

Q: On January 1, 2009, Dermot Company purchased 10% bonds having a maturity value of $50,000 for…

A: Financial instrument refers to an agreement between two entities that creates financial assets to…

Q: Calculations Marketing Inc. Issued 14.0% bonds with a par value of $500,000 and a five-year life on…

A: The bonds are issued or purchased either at discount or at a premium. The bond amortization table is…

Q: Corporation. Interest is paid semi-annually. The bond indenture indluded the following int Face…

A: Journal entry (JE) refers to the entries which are recorded in the original book of accounts and it…

Q: On January 1, 2016, Colt Co. issued ten-year bonds with a face amount of $1,000,000 and a stated…

A: Introduction: A bond is a fixed responsibility issued by corporations or government entities to pay…

Q: A company issued 9%, 10-year bonds with a face amount of $100 million. The market yield for bonds of…

A: The objective of this question is to find out the selling price of the bonds issued by the company.…

Q: A company issued 5%, 20-year bonds with a face amount of $80 million. The market yield for bonds of…

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: On January 1, 2024. Ithaca Corporation purchases Cortland Incorporated bonds that have a face value…

A: Bond is a debt security which is purchased to earn the fixed interest on the investment with low…

Q: On January 1, 2018, Wauwatosa Inc. issued 5- year bonds with a fave value of $200,000 and a stated…

A: When the issue price of the bond is higher than its face value, the bonds are said to be issued at a…

Q: In 2022, Dvorak Company issued $200,000 of bonds for $189,616. If the stated rate of interest was 6%…

A: Note: Under effective interest method, interest expense is calculated by multiplying the yield or…

Q: A company issued 6%, 10-year bonds with a face amount of $75 million. The market yield for bonds of…

A: Issue price of bonds would be the present value of the interest annuity & maturity amount at…

Q: On January 1, a company issued $19,383,400 of 12 year bonds with a coupon rate of 7%, payable…

A: Compound = 2 (semiannually) Time = t = 12 * 2 = 24 Coupon rate = 7/2 = 3.5% Interest rate = r = 5/2…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.325%.…

A: Given, Number of bonds bought is 10 Coupon rate 9.325% Purchase price 89.875

Q: Culver Corporation issues $450,000 of 8% bonds, due in 9 years, with interest payable semiannually.…

A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

Q: A $15,000 bond redeemable at par on May 09, 2011 is purchased on April 14, 2001. Interest is 9.2%…

A: Bonds refer to the financial instrument issued by the government or financial corporation fro…

Q: On January 1, 2016, Broker Corporation issued $3,000,000 par value 12%, 10-year bonds which pay…

A: Issue Price of Bond=Present Value of Maturity amount+Maturity value of Interest payment Present…

Q: Rosa Co. issued 2000, 15 year bonds with a face value of $1,000 each on 1st October 2012. The…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Fou want to buy a $221,000 home. You plan to pay 15% as a down payment, and take OL he rest. a) How…

A: Down payment is the advance cash payment that is made out of pocket for the purchase of a home and…

Q: Ivanhoe Corporation issues $570,000 of 9% bonds, due in 10 years, with interest payable…

A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

Q: Briefly explain the following; (i) Time value of money (ii) Investment decision (iii)…

A: Finance is considered as the life blood of an organisation. It is necessary to manage finance in…

Q: On Thursday, July 22, 2010, you bought (traded) the FG, Inc. 6.75% corporate bonds for $101.25. The…

A: Bond-valuation is a method that is used to determine the theoretical value that should be assigned…

Q: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semi-annual…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing…

Q: A company issued 7%, 20-year bonds with a face amount of $90 million. The market yield for bonds of…

A: The price for bond implies to the consideration amount paid by investor for purchasing bond. In…

Q: Determine the issue price of bonds:

A: The price of the bond is the PV of all future interest (also called coupons) and par value…

Q: The 10% bonds payable of Klein Company had a net carrying amount of P570,000 on December 31, 2016.…

A: The question is based on the concept of Financial Accounting.

Q: On January 1 2022, a company issued $400.900 of 10 year, 12% coupon rate bonds. The interest is…

A: Bonds are the securities which are issued by the entities in order to raise capital for the…

Q: 3Ts Corp. issued a 21-year bond on Sept. 1, 2003. The bonds have semiannual coupon payments, an…

A: Here,IssueDate is 1/Sept/2003Today's Date is 1/Mar/2017Time Period of Maturity is 21 yearsMaturity…

Q: The Pennington Corporation issued a new series of bonds on January 1, 1978. The bonds were sold at…

A: "Since you have asked a question with sub-parts more than three, as per guidelines, the first three…

Q: Most Solutions, Incorporated, issued 11% bonds, dated January 1, with a face amount of $400 million…

A: The cash flows are very important to the company. the company raises money by issuing bonds. Bonds…

Q: Find the total proceeds (in $) from the sale of 30 bonds with a coupon rate of 8.75 and a current…

A: Consider the provided question, Given that, number of bonds = 30 Coupon rate = 8.75% current price =…

Q: On January 1, 2012, Instaform Company issued 10% bonds with a principal amount of $50 million, dated…

A: Bonds are the debt instruments that are used by an entity for the purpose of raising finance.

Q: A $25,000 bond redeemable at par on November 08, 2015 is purchased on February 03, 2006. Interest is…

A: The cash price will reflect the present value of all the coupon payments and principal too. Given…

Q: 1. On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The…

Q: Un January 1, 2021, Concord Corp. issued five-year bonds with a face value of $370,000 and a coupon…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: On January 1, 2017, Ellison Co. issued eight-year bonds with a far value of S6,000,000 and a stated…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Aloe Corp has outstanding 7%, 10-year, $2,000,000 face value bond. The bond was originally sold to…

A: Formula: Difference in bond value = Carrying value of bond - Face value of bond

Q: A $23,000 bond redeemable at par on September 01, 2013 is purchased on April 17, 2002. Interest is…

A: A bond is a debt instrument that provides coupons and face value as payments to the investor, who…

Question

Ten $10,000, 9.5% bonds with semi-annually coupons redeemable at par on March 05, 2016, were bought on May 22, 2005, to yield 7.3% compounded
semi-annually. The bonds were sold on September 20, 2010, at 101.2. Find the gain or loss on the sale of the bonds without constructing a bond schedule.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Carrying Value of bonds:

Excel formulation:

Excel computation:

Answer:

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consolidated Enterprises issues €10 million face value, ten-year bonds with a coupon rate of 7.5 percent on January 1, 2009. At the time of issuance, the market interest rate is 4.0 percent. Using the effective interest rate method of amortization, the carrying value at the beginning of 2009 will be interest expense in 2009 will be The December 31, 2009 will be greater than €12.7 millions less than €12.7 millions equal to €12.7 millions equal to €0.75 millions greater than €0.75 millions less than €0.75 millions . The carrying value on
Ofir just issued 9.2% 12-year bonds. Find the YTM if these bonds make semiannual payments and are currently selling for 104% of par value. Specify the answer as 'X.XX%' 10.30% 4.29% 8.59% 9.45% 7.73%
5. Grohl Co. issued 8-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual payments. If the YTM on these bonds is 11 percent, what is the current bond price? a) $1,531.43 b) $1,010.00 c) $718.96 d) $1,005.00 e) $1,000.00
Insouciance, Inc. (President, John Carefree) issued $200,000, 8% coupon bond on January 1, 2010, due on December 31, 2014. The prevailing market interest rate on January 1, 2010 was 10%, and the bond pays interest on December 31 of each. Consider the following (incomplete) table for the bond's carrying value (CV) Dec 31, 2012 ? Dec 31, 2013 CV Required: a. Calculate the price of the bond b. Calculate the missing CV c. How much interest expense did Insouciance record in 2013? d. Now assume semi-annual compounding so that the bond pays interest on June 30 and December 31 of each year. Repeat (a), (b), and (c).
am. 74.
The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 7% bonds with a face amount of $46 million were issued for $46 million on October 31, 2015. The bonds mature on October 31, 2035. Bondholders have the option of calling (demanding payment on) the bonds on October 31, 2025, at a redemption price of $46 million. Market conditions are such that the call is not expected to be exercised. b. Management intended to refinance $6.6 million of its 14% notes that mature in May 2025. In early March, prior to the actual issuance of the 2024 financial statements, Nevada Harvester negotiated a line of credit with a commercial bank for up to $4.6 million any time during 2025. Any borrowings will mature two years from the date of borrowing. c. Noncallable 6% bonds with a face amount of $14.5 million were issued for $14.5 million on September 30, 2005. The bonds mature on September 30, 2025. Sufficient cash is expected to be available to…
The balance sheet of River Electronics Corporation as of December 31, 2023, included 13.25% bonds having a face amount of $90.4 million. The bonds had been issued in 2016 and had a remaining discount of $3.4 million at December 31, 2023. On January 1, 2024, River Electronics called the bonds before their scheduled maturity at the call price of 104.
Zhang Company, an IFRS company, sold $7,000,000 of 6%, 3-year bonds on January 1, 2022. The bonds pay interest each December 31. It cost the company $30,000 in bond issue costs. The bonds were sold at par. What is the effective interest rate for the bonds? Group of answer choices 8.52% 5.84% 6.16% 6.14%
On January 2, 2014, a calendar-year corporation sold 12% bonds with a face value of $200,000. These bonds mature in six years, and interest is paid semi-annually on June 30 and December 31. The bonds were yield 10%. What was the issue price of the bond? a. $217,726.50 b. $183,232.31 c. $200,000.00 d. $344,000.00 e. None of the above
1.
AS18.000 bond redeemable at par on July 09. 2013 is purchased on September 12, 2007. Interest is 7.4% payable semi-annually and the yiold is 7.9% compounded semi-annualy (a) What is the cash price of the bond? (b) What is the acorued interest? (c) What is the quoted price? (a) The cash price is S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed) (b) The acorued interest is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The quoted price is S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed)

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS