a)Katie paid $9,400 for a corporate bond with a par value of $10,000 and a coupon rate of 6.5%. She holds the bond for 2 full years and then sells the bond for $9,700. Since Katie is in the 25% marginal tax bracket, how much tax will she have paid during the time she held the bond? (Ignore Long-term capital gains) b)Tim has an opportunity to buy a $1,000 par value bond with a coupon rate of 7% and a maturity of 5 years. If Tim requires a 9% return on his investments, what is the most he would pay for this bond? C)Mark has a portfolio of bonds worth $30,000. They are all 6% bonds with a maturity in 15 years. New bonds are currently selling at a rate of 8%. How much money can Mark expect to receive on the sale of his bonds?
1 a)Katie paid $9,400 for a corporate bond with a par value of $10,000 and a coupon rate of 6.5%. She holds the bond for 2 full years and then sells the bond for $9,700. Since Katie is in the 25% marginal tax bracket, how much tax will she have paid during the time she held the bond? (Ignore Long-term
b)Tim has an opportunity to buy a $1,000 par value bond with a coupon rate of 7% and a maturity of 5 years. If Tim requires a 9% return on his investments, what is the most he would pay for this bond?
C)Mark has a portfolio of bonds worth $30,000. They are all 6% bonds with a maturity in 15 years. New bonds are currently selling at a rate of 8%. How much money can Mark expect to receive on the sale of his bonds?
d)You previously purchased a $1,000 bond, with a coupon rate of 5%. If comparable bonds are currently selling at a coupon rate of 4%, which is the current market value of your bond?
e)Last year you purchased a 15 year bond at 98 with a coupon rate of 5%. The current market rate is 3%. If you sold your bond today, what would be your total return on your investment (ignore taxes)?
f)Julio purchased a $1,000 corporate bond with a 4% coupon rate. The bond is currently quoted at 106.
1. What is the current price of the bond?
2. Given the current
g)Bernie purchased 20 bonds with par values of $1,000 each. The bonds carry a coupon rate of 9% payable semiannually. How much will Bernie receive for his first interest payment?
h)You previously purchased a $1,000 bond, with a coupon rate of 5%. If comparable bonds are currently selling at a coupon rate of 4%, which is the current market value of your bond?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
1You previously purchased a $1,000 bond, with a coupon rate of 5%. If comparable bonds are currently selling at a coupon rate of 4%, which is the current market
by Bartleby Expert1f)Julio purchased a $1,000 corporate bond with a 4% coupon rate. The bond is currently quoted at 106.
a. What is the current price of the bond?
b. Given the current
by Bartleby Expert
