The bonds were for a 20-year term, but at the time of purchase, there was 15 years remaining. The value at the time of maturing is $100,000. The annual interest rate at the time of issuance of the bonds was 4%. What was the initial cost/value of the bonds? At the time you purchased the bonds the market rate was 6%. How much were the bonds worth when you purchased? Did the seller gain or lose money on their decision to sell?
The bonds were for a 20-year term, but at the time of purchase, there was 15 years remaining. The value at the time of maturing is $100,000. The annual interest rate at the time of issuance of the bonds was 4%. What was the initial cost/value of the bonds? At the time you purchased the bonds the market rate was 6%. How much were the bonds worth when you purchased? Did the seller gain or lose money on their decision to sell?
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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You recently purchased bonds sold by Microsoft. The bonds were for a 20-year term, but at the time of purchase, there was 15 years remaining. The value at the time of maturing is $100,000. The annual interest rate at the time of issuance of the bonds was 4%.
What was the initial cost/value of the bonds ?
At the time you purchased the bonds the market rate was 6%. How much were the bonds worth when you purchased?
Did the seller gain or lose money on their decision to sell?
Note: The solution should not be hand written.
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