Suppose Roberto is considering a 12-year bond with a face value of $2,000 and a rate of 8% payable semiannually. Calculate the payment Roberto would have to make if an "effective" annual interest rate of 8.2% were required.
Q: the current interest rate on bonds of a certain type is 10%, compounded semiannually, what should…
A: Market price of bond = Present value of all coupon payments +Present Value of face value We need to…
Q: Consider a fixed-payment security that pays $250 at the end of every year for eight years. If the…
A: Present value of the bonds will present value of annuity received at the end of every year for eight…
Q: The amount of the prospective investor pay for a bond if he desires an 13% return on his investment…
A: Redemption amount (R) = P 40000 Annual interest (A) = P 1200 n = 20 years r = 13%
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: An investor purchases a 20-year, $1,000 par value bond that pays semiannual interest of $40. If the…
A: The Stated semiannual interest payment $40 Rate of interest = 5% 20 years * 2 = 40 payments Present…
Q: Jerry and his wife just purchased the U.S. Treasury bond, and they have annual income $300,950. The…
A: given information annual income = 300,950 pay a lumpsum of exact 4 years from today interest rate =…
Q: You are considering purchasing a bond between settlement periods with a 6% coupon rate and 4…
A: A bond is a type of financial asset in which the issuer owes the holder a debt and is required to…
Q: You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months.…
A: Given, Number of periods(n) = 20 r = I/YR =10%/2= 5% PMT = $60 Face value (FV) = $1000
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: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…
A: Given information: Par value of bond is $10,000 Purchase price is $9,500 Bond rate is 6.6% per year…
Q: ACT has an outstanding bond with a face value (principal) of Php. 1,000 which would mature in 10…
A: Bond Bonds have an annual coupon rate attached to themselves, which the bondholder receives each…
Q: Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount…
A: Interest rate = Fixed amount of interest / Face value
Q: Landon is considering the purchase of a $2500 bond from Braydon. There are 5 years remaining until…
A: Given Information : Offer price of bond : $2,500 Time to maturity (n) : 5×2=10 Face value of bond…
Q: What would you pay for a $175,000 debenture bond that matures in 15 years and pays $8,750 a year in…
A: Issue price of the debenture = Present value of principal + Present value of interest payments…
Q: Joe must pay labilities of 1,000 due six months from now and another 1,000 due one year from now.…
A: Corporate bonds are a kind of bond that are issued by a company in order to raise funds from…
Q: Quinn purchases a bond for $29,000 when the market interest rate is 13% per year, compounded…
A: Bond is a debt security that is issued by organizations to raise debt funds from investors in…
Q: You are considering a 10-year, $1,000 par value bond. Its coupon rate is 9%,and interest is paid…
A: N = 20 semi annual periods Par Value = 1000 Coupon = Coupon Rate / 2 * Par Value = 9%/2* 1000 = 45…
Q: You have an opportunity to purchase a bond that will pay out $815 in 10 months. If you would like…
A: Payout in 10 months = $ 815 Interest rate = 2.2% Period = 10 months
Q: You are considering purchasing a 30-year bond for $1500. If the coupon rate is 5.7% APR paid…
A: A bond is an instrument that represents the loan that is made by the investor to the company and…
Q: You purchased a $1000 20-year bond with a 5 year call provision. If the bond pays $95 annually and…
A: Yield to Call Years 5 coupon amount (PMT) 95 Face value (FV) 1000 Present value 850
Q: A bond pays $1,500 at the end of each year for five years, plus an additional $2,000 when the bond…
A: Annual cash inflow = $ 1500 Maturity value = $ 2000 Years to maturity = 5 Years Annual interest rate…
Q: Suppose a bond has a face value of $3,000, 10 years to maturity, an annual coupon of 7%, and sells…
A: 1) Face value = $3000 Selling price = $2800 Duration till maturity (n) = 10 years Coupon = 7% of…
Q: Lisa's new firm plans to issue a permanent callable bond with a par value of $1,000 and a nominal…
A: Permanent Callable Bonds are Bonds that can be purchased by the seller at any time after selling the…
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: Suppose that an investment institution offers you two kinds of bonds and you are willing to take one…
A: Present worth of a bond means the present value of all the future payments which are going to be…
Q: Nick would like to invest a certain amount of money for two years and considers investing in a…
A: Here, Strategy A: Buy a one year bond that pays 5% and in year one, then buy another one year bond…
Q: A man wants to make 14% nominal interest compounded semi - annually on a bond investment. How much…
A: Here we asked to find the bond price given a specific yield (14%). We can do this by using the time…
Q: You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months.…
A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…
Q: A man wants to make 16% nominal interest compounded semiannually on a bond investment. How much (in…
A: The amount to be paid now will be the present value of the future coupon and principal payments.
Q: You will be paying $10,000 a year in tuition expenses at the end of the next two years. Bonds…
A: a) The computation of duration of obligation: Hence the duration of obligation is 1.4808. and…
Q: Suppose you purchase a $5,000 bond that pays 7% interest annually and matures in five years. If the…
A: The investor is estimating the real rate of return on the securities. This will be calculating by…
Q: Assume you will be paying $10,000 per year in tuition expenses at the end of each of the next two…
A: Honor code: As you have posted a question with multiple sub-parts, we will solve the first three…
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: You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months.…
A: The price of the bond shall be the present value of face value of the bond and semi annual coupons…
Q: An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000 and…
A: Corporate bond-It is a bond issued by a company to fund its business operations, major expansions,…
Q: A bond promises to pay you $7,000.00 in 10 years. If you are able to earn 6 percent on securities of…
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…
Q: Calculate the maximum price of the bond to guarantee that Toby will earn an annual nominal interest…
A: NOTE: INTEREST RATE ASSUMED SIMPLE. AND NOT EFFECTIVE. COMPOUNDING SEMIANNUALY…
Q: you expect the inflation rate to be 15 percent next year and a one-year bond has a yied to maturity…
A: Real interest rate is nominal interest rate minus inflation. Nominal interest rate is interest rate…
Q: Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes…
A: Using excel PV function
Q: The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the…
A: Rate of return is one of the discounted cash flow techniques used by business entities in order to…
Q: What would be the selling price of a 10-year bond with face value of 100,000, interest at 20% which…
A: Face value = 100000 The bond pays quarterly interest Coupon = (20% of 100000) / 4 = 5000 Interest…
Q: A bond promises to pay the bondholder equal payments of php 6000.00 in six month interval for 30…
A: Bonds are referred as the fixed income instrument as the bonds are used to make the payment of the…
Q: Suppose you are deciding whether to buy a particular bond. If you buy the bond and hold it for 9…
A: Answer: Calculation of the present value of the payment of $8,981, if the interest rate is 4%:…
Q: We are planning to purchase a 6% bond with a face value of $1000 that pays interest semi-annually.…
A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: you intended to purchase a 10 year, $1,000 face value bond pays interestof $60 every 6 months if…
A: Computation of bond price Table values are based on: n= 20 i= 5.00% Cash flow Table…
Q: You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid…
A: Since you have posted multiple questions, we will answer the first one for you. If you want a…
Q: You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 13…
A: Implied interest should be taxable and needs to be declare on your tax return.
Q: You are considering purchasing a 15-year bond for $2400. If the coupon rate is 5.6% APR paid…
A: Total interest during the life of bonds = Principal value * Interest rate * Years
- Suppose Roberto is considering a 12-year bond with a face value of $2,000 and a rate of 8% payable semiannually. Calculate the payment Roberto would have to make if an "effective" annual interest rate of 8.2% were required.
Step by step
Solved in 2 steps
- Which of the following statements is true? You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Select one:You have an opportunity to purchase a bond that will pay out $815 in 10 months. If you would like to earn at least a 2.2% annual rate of simple interest on your investment, what is the largest amount the you should pay for the bond? Round your answer to the nearest cent.A man wants to make 14% nominal interest compounded semi - annually on a bond investment. How much should the man be willing to pay bow for a 12%, P10, 000 bonds that will mature in 10 years and pays interest semi - annually?
- Suppose you are deciding whether to buy a particular bond. If you buy the bond and hold it for 9 years , then at that time you will receive a payment of $8,981. If the interest rate is 4 percent, then the present value is....You wish to purchase a $1,000 bond from a friend who needs the money. There are 7 years remaining until the bond matures, and interest payments are quarterly. You decide to offer $750.08 for the bond because you want to earn exactly 16% per year compounded quarterly on the investment. What is the annual bond rate of interest?Having an opportunity to acquire a certain bond that has a face value of P1M and matures in 5 years, Lenard decided to buy the bond. This means that when the bond reached its maturity date, he will be receiving P1.2M. The bond is contracted at a foxed nominal rate of 16% and interest payments to be paid quarterly. On the other hand, Lenard would like to earn an 18% nominal interest compounded quarterly. Given the scenario, determine how much Lenard should be willing to pay to gain the bond.
- an individual is interested in a five year bond that pays a 6.8 percent coupon rate with interest to be received semiannually. the required rate of return is 8 percent. what is the most they would be willing to pay for this bond ? Assume face value is $1000.You will receive $60 interest every six months from your investment in a corporate bond. The bond will mature in five years from now and it has a face value of $2,000. This means that if you hold the bond until its maturity, you will continue to receive $150 interest semiannually and $2,000 face value at the end of five years.(a) What is the present value of the bond in the absence of inflation if the market interest rate is 9% '?(b) What would happen to the value of the bond if the inflation rate over thenext five years is expected to be 4%?You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? a. $ 957.50 b. $826.31 c. $1,086.15 d. $1,032.20 e. $1,124.62
- A certain government-issued 10-year bond pays an interest at 16 percent every three months. If the total quarterly expense is 83,000 and the bond earns at 20 percent every three months, what is the face value of the bond? How much in the present should he pay for the bond? Round off to two decimal places in the final answer/s.Stan Moneymaker has the opportunity to purchase a certain U.S. Treasury bond that matures in eight years and has a face value of $10,000. This means that Stan will receive $10,000 cash when the bond’s maturity date is reached. The bond stipulates a fixed nominal interest rate of 8% per year, but interest payments are made to the bondholder every three months; therefore, each payment amounts to 2% of the face value. Stan would like to earn 10% nominal interest (compounded quarterly) per year on his investment, because interest rates in the economy have risen since the bond was issued. How much should Stan be willing to pay 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 15 years and pays quarterly interest. Thismeans that she will receive quarterly interest payments on the face value of the bond ($10,000) at 6% nominal interest. After 15 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?