A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,000 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)? The rate of return per quarter is %. The rate of return per year is %.
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- A savvy investor paid $6,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 12% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)?A savvy investor paid $6000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what rate of return did the investor make (a) per quarter, and (b) per year (nominal)?Last year, Joan purchased a $1,000 face value corporate bond with an 10% annual coupon rate and a 25-year maturity. At the time of the purchase, it had an expected yield to maturity of 12.84%. If Joan sold the bond today for $999.13, what rate of return would she have earned for the past year? Round your answer to two decimal places.
- Last year Janet purchased a $1,000 face value corporate bond with an 8%annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expectedyield to maturity of 10.45%. If Janet sold the bond today for $820.17, what rate of returnwould she have earned for the past year?Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is sold for cash, but the interest rates have risen to 8.5%. (a)How much has the bond paid in total for the first five years? (b)How much will the bond pay the person buying it over the next 25 years? (c)How much is the bond currently worth?Four years earlier, Janice purchased a $1,000 face value corporate bond with a 6% annual coupon and maturing in 10 years. At the time of the purchase, it had an expected yield to maturity of 8.76%. If Janice sold the bond today for $1,088.39, what rate of return would she have earned for the last four years?
- Suppose that you invest $50,000 into a downpayment on a $250,000 house, which has a price appreciation of 3% per year. Your mortgage is fixed at $ 36,000 per year, and your tenants pay you $24,000 per year. Property taxes, maintenance, and other expenses cost $5,000 per year. Suppose that after 25 years, you sell your property. Would it have been better to invest $ 50,000 in the stock market, assuming it has returns of 9% per year over the same time period (25 years)? Why? Show your calculations and justify your answer. For the purposes of this question, suppose that inflation is zero.Please assist with the following question below with handwritten working: An investor purchased a bond that pays $5 coupons annually at the end of every year for five years. The purchase price was $100 and it was redeemed at par after five years. If the annual effective inflation rate over the time period was 3%, calculate the real rate of return earned by the investor on this bond.Three years ago, you purchased a corporate bond that pays 5.8 percent. The purchase price was $1,000. What is the annual dollar amount of interest that you receive from your bond investment?
- A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 8 percent. What is the current price of the bond? (Look up the answer in Table 16–2.) Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. What is her dollar profit based on the bond’s current price? Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to cover the interest costs on the loan. How much of the purchase price of $1,050 did Ms. Bright pay in cash? What is Ms. Bright’s percentage return on her cash investment? Divide the answer to part b by the answer to part c. Explain why her return is so high?You bought a $1000 corporate bond for $900 three years ago. It is paying $30 in interest at the end of every 6 months, and it matures in 5 more years. (a) Compute its coupon rate. (b) Compute its current value, assuming the market interest rate for such investments is 4% per year, compounded semiannually.An investor has purchased a 20-year bond with a nominal value of 1000 TL, an annual coupon interest rate of 10% and a commitment to pay coupon interest annually. The investor paid 850 TL for this bond. The annual interest rates in the market today are 12%. The investor sold the bond 2 years after receiving it when the interest rate on the market is 8%. Calculate the rate of return of the investor from this investment. Calculate what the rate of return would be if the investor sold this bond in the 3rd year. Consider that the market rate will be stable for upcoming years as 12%. Calculate the value of the bond in the 5th, 6th and 10th years. 11 years have passed since the receipt of the bond, and the market interest rates increased to 18%. Calculate the new value of this bond.