Eren purchased a bond, costing 890, three years ago, with a current price of 925. This bond paid 100 year as interest payments ( end of each year). She wants to hold the bond for 4 more years and it is expected to be sold at the end of year four at 960. It is also expected that there will be no default of yearly interest payments. Assuming that the required rate of return is 11.25%.
Q: By the end of this year you would be 35 years old and you want to plan for your retirement. You wish…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: On January 1, 2021, Austin plans to pay $1,050 for a $1,000, 12% semiannual bond. He will keep the…
A: Given information: Present value is $1,050 Coupon rate is 12%, Par value of bond is $1,000 Interest…
Q: Mark buys a 10-year bond of face (and redemption) amount of $1000, with 10% annual coupons at a…
A: Here, To Find: Yield earned on the investment =?
Q: Scofield purchased a bond, costing 890, three years ago, with a current price of 925. This bond paid…
A: Yearly Interest Payments (Coupon) = 100 Time Period for Holding (N) = 4 years Price of Bond at end…
Q: Grandpa Russ thinks he needs a fixed income for the next 10 years. He currently has $10,000 in CDs,…
A: Please find the answers to the above questions below:
Q: Linda wanted to invest in a bond issued by JoJo Ltd. The bond has $1,000 par value, matures in ten…
A: Bonds: Bonds are a debt instrument on which interest is paid. They can be issued at a discount/par…
Q: Last year Janet purchased a $1,000 face value corporate bond with an 12% annual coupon rate and a…
A: YTM is the rate of return a bond will generate if it is held until maturity. It is that discounting…
Q: On January 1, 2020, Janet buys a bond for P10,000 that will make coupon payments of P600 after each…
A: A bond is a debt instrument where a sum is forwarded (which can be at a premium or discount) and the…
Q: A savvy Investor paid $7,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of…
A: Given: Particulars Amount Invested $7,500 Year 20 Mortgage $10,000 Interest rate 12%…
Q: On January 1, 2020, Janet buys a bond for P10,000 that will make coupon payments of P600 after each…
A: Data given: Coupon payment = P 600 Maturity value = P 10,000 Rate = 6% t= 2 years New interest rate…
Q: A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2%…
A: Given: Particulars Amount Invested $5,000 Year 20 Mortgage $10,000 Interest rate…
Q: A 3-year corporate bond is issued on 1/5/19 with a face value of $100 and a coupon of 2% pa (paid…
A: Here,
Q: Last year Janet purchased a $1,000 face value corporate bond with a 9% annual coupon rate and a…
A: Face Value = 1000 Coupon = Coupon Rate × Face Value = 9% × 1000 = 90 Time Period (N) = 15 years YTM…
Q: Adam buys a three-year bond with a $1000 face value and a 10% coupon rate for $1000 today. If one…
A: Bond Years = 3 Today Bond Price = $1000 Face Value =$1000 Coupon Rate = 10% Coupon Amount =…
Q: Last year Janet purchased a $1,000 face value corporate bond with a 10% annual coupon rate and a…
A: given data par value = 1000 annual coupon = 1000 *10% = $100 yield to maturity = 9.35% JANET sold…
Q: John buys a 10-year bond with annual coupons. The par value of this bond is 10000 as is the…
A: IRR is the minimum return which is required by an investor to make a profitable investment.
Q: Mr. Simpson intends to buy a 4-year bond that promises to repay the face value of $2,000 in 4 years…
A: face value = $2000 Coupon rate = 2.25% Coupon Amount = 2000 * 2.25% = 45 Years(n) = 4 Interest…
Q: You want to buy a 10-year bond with a maturity value of $2,000, and you wish to get a return of 5.5%…
A: Present value is the value of money today is worth more than that same amount in the future. It is…
Q: Bill wants to buy a bond. It has a face value of $10,000, a bond rate of 4% (nominal), payable…
A: Solution:- Bond price means the price at which the bond is currently trading in the market. We know…
Q: Tran Jiang has $2,000 to invest. Usually, he would deposit the money in his savings account, which…
A:
Q: Ms. Jones want to make 12% nominal interest compunded quarterly on a bond investment. She has an…
A: Bond price is present discounted value of future cash stream generated by bond. It is the sum total…
Q: Latasha would like to invest a certain amount of money for three years and considers investing in…
A: The question is based on the concept of interest rate term structure by use of pure expectation…
Q: Penelope purchased a $10,000, 8% quarterly bond, held it for five years, received twenty coupon…
A: Bond It is a financial instrument that offers a series of equal coupon payment at equal interval…
Q: Last year Janet purchased a $1,000 face value corporate bond with a 9% annual coupon rate and a…
A: Given Information At time of purchase Face Value of Bond =$1000 Annual Coupon rate =9% Time to…
Q: Kayla is considering an investment in either a bond or a financial instrument that has a return of…
A: Kayla has an option to either invest in bond or financial instruments that is providing a 0.5%…
Q: Sophia bought a bond when it was issued by Exxon Mobil Corporation 14 years ago. The bond, which has…
A: Bond is a debt instrument issued by companies and government. It is a fixed income instrument which…
Q: Four years earlier, Janice purchased a $1,000 face value corporate bond with a 6% annual coupon and…
A: Purchase price = Coupon Amount * PVAF ( Yield, Years ) + Face value * PVIF ( Yield, Years )
Q: A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2%…
A: Rate of return on a bond is the rate which denotes the total return which an investor will get from…
Q: By the end of this year you would be 35 years old and you want to plan for your retirement. You wish…
A: Retirement account interest = 7% Period of retirement account = 30 years Annual coupon = 6% Annuity…
Q: A savvy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8%…
A: Current Price $ 6,000.00 Bond Price $…
Q: If Annie buys the bond today at its $1,000 par value and holds it for exactly 3 years, at which time…
A: Given, The face value of bond is $1000 Interest rate is 8%
Q: Emily purchased a bond valued at $10,000 for highway construction for $4,540. If the bond pays 7.9%…
A: This is the question of TIME VALUE OF MONEY. According to TIME VALUE OF MONEY, FV=PV×1+Rmm×t where,…
Q: The face value for WICB Limited bonds is $250,000 and has a 6 percent annual coupon. The 6 percent…
A: Price of the bond is the present value of future cashflows
Q: Mike is interested in purchasing a bond that matures in 15 years, pays a 9.0% coupon semiannually…
A: Assuming Face Value = 1000 Semi Annual Compounding, Time Period = 15 years * 2 = 30 semi annual…
Q: An engineer planning for retirement is considering purchasing a savings bond with a face value of…
A: An investor purchases an asset if the current value of asset is more than the purchase price.…
Q: Amy wants to buy a bond that will mature to $5500 in eight years. How much should she pay for the…
A: Bond refers to an instrument of indebtedness which is issued to the holders by the organizations.…
Q: Ms. Jones wants to make 8% nominal interest compounded quarterly on a bond investment. She has an…
A: Given information: Nominal interest rate is 8% Par value of bond is $10,000 Number of periods is 15…
Q: Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a…
A: Given that;Face value is $1000Time period is 15 years Yield to maturity is 10.45%
Q: A savvy investor paid $6000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8%…
A: a. The computation of quarterly rate of return is done below: The formulation for computing the…
Q: Suppose that Jenna just bought a newly issued 15-year bond with a coupon rate equal to 7%. If Jenna…
A: Yield to Maturity (YTM) is the internal rate of return required for the present value of future cash…
Q: Last year Janet purchased a $1,000 face value corporate bond with an 12% annual coupon rate and a…
A: Excel Spreadsheet:
Q: By the end of this year you would be 35 years old and you want to plan for your retirement. You wish…
A: Annuity is the number of payments of an equal amount and is made at an equal interval of time. At…
Q: By the end of this year you would be 35 years old and you want to plan for your retirement. You wish…
A: Retirement account is the account in which deposits are made by the individual during the years of…
Q: Bianca purchased a $5,000 bond that was paying a coupon rate of 4.50% compounded semi-annually and…
A: Bonds: Bonds are the liabilities for the company that is issued to generate the funds required for…
Q: A man was offered a bond with a face value of ₱1,000,000 which has interest of 8% per year payable…
A: The term bonds refer to the debt instruments that are issued with a motive to raise debt from the…
Eren purchased a bond, costing 890, three years ago, with a current price of 925. This bond paid 100 year as interest payments ( end of each year). She wants to hold the bond for 4 more years and it is expected to be sold at the end of year four at 960. It is also expected that there will be no default of yearly interest payments. Assuming that the required
Compute the price of the bond?
Step by step
Solved in 2 steps
- If Annie buys the bond today at its $1,000 par value and holds it for exactly 3 years, at which time the required return is 7.0%, how much of a gain or loss will she experience in the value of the bond (ignoring interest already received and assuming annual interest)? Rework part (f), assuming that Annie holds the bond for 10 years and sells it when the required return is 7.0%. Compare your finding to that in part (f), and comment on the bond's maturity risk. Assume that Annie buys the bond at its current price of $983.80 and holds it until maturity. What will her current yield and yield to maturity (YTM) be, assuming annual interest? After evaluating all of the issues raised above, what recommendation would you give Annie with regard to her proposed investment in the Atilier Industries bonds?Isona has owned a $10,000, 10-year bond for 4 years and is considering selling it. If it has a bond rate of 4% annually, Isona paid $9,100 for it originally, and she wants an 9% annual yield, how much should she charge for the bond?Ms. Jones wants to make 8% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 6%, $10,000 bond that will mature in 16 years and pays quarterly interest. This means that she will receive quarterly interest payments on the face value of the bond ($10,000) at 6% nominal interest. After 16 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?
- 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.Mildred can purchase a municipal bond with a par (face) value of $1000 that will mature in 10 years. The bond pays 6% interest compounded quarterly. If she can buy this bond for $1050, what rate of return will she earn?Ms. Jones want to make 12% nominal interest compunded quarterly on a bond investment. She has an opportunity to purchase a 10% , $10000 bond that will mature in 18 years and pays quarterly interest. this means that she eill receive quarterly interest payments on the face value of the bond ($10000) at 10% nominal interest. after 18 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?
- Susan can buy a zero-coupon bond that will pay 1,000 at the end of 12 years and is currently selling for 624.60. Instead, she purchases a bond with 6% semi-annual coupons that will pay 1,000 at the end of 10 years. If she pays X for this bond she will earn the same annual effective interest rate as the zero-coupon bond. Calculate X.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)?If the owners choose to invest in bonds instead, they look at a $136,125.00 bond set to mature in 9 years with a bond rate of 2.00%, payable semi-annually. The market rate is 5.40%, compounded semi-annually. The owners will only purchase the bond if they can afford it with their savings ($123,750.00), and they can get the bond at a discount because they think the market rate will go down, potentially making the bond more valuable in the future. 2. Calculate the purchase price of the bond if it is purchased today (9 years before maturity). 3. Do the owners have enough money to buy their bond? Will they make the purchase?
- 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 James just bought the same 15-year bond that Jenna bought and at the same time. If James sells his bond five years from the day he purchased it (with 10 years remaining to maturity) for $1,074, what would be the bond's yield to maturity when he sells it? What return would he earn during the time he held the bond? What portion of the return represents capital gains and what portion represents the current yield?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)?