On issue date, Eric bought a bond offered with the following details. For simplicity, assume that coupons are tax-free. Issuer Par Value Tenor Coupon Rate Issue Date Maturity Date Coupon Payment every 3 months O 5.15% O 5.25% 16888 Corporation O 5.2% P10,000 O 5.3% 5 years 5.2% p.a. If Eric sells the bond on December 10, 2020 at P10,100, what would be the current yield of the buyer? December 10, 2018 December 10, 2023
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- Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?On July 1, 2015, Janet purchased a corporate bond with a face value of $40, 000 and coupon rate of 3.5% compounded semi - annually. Training The bond matures in 20 years. On July 1, 2020, Janet decides to sell the corporate bond. How much is the bond worth if interest rate for similar bonds is J 2 = 2.8%.On 5th December 2020, Jerome purchases a government bond worth $400, with a maturity of 3 years, face value of $500, and a coupon rate of 5% paid annually. The first coupon payment will be received a year from now (i.e., on 5th December, 2021). The yield to maturity offered by equally risky bonds is currently 7%. Such a yield to maturity stays constant over the next two years. On 5th December 2022, Jerome decides to sell this bond after receiving the second coupon payment. It turns out that, on that day, the new yield to maturity offered by equally risky bonds is 1.5%. At what price will Jerome be able to sell his bond?
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- Toby purchased a 20-year bond which pays semiannual coupons of 8%. The par value is 1,000 and the purchase price was 812.77. The bond is redeemable at 110% of par. What is the yield to maturity (expressed as a nominal, semi-annual rate) Toby received if the bond was held to maturity?Bones Ely owns a $1,000 face-value bond with three years to maturity. The bond makes annual interest payments of$75, the first to be made one year from today. The bond is currently priced at $975.48. Given an appropriate discount rate of 10%, should Bones hold or sell the bond?In 2014 Ray purchased a 10-year, 3.80% p.a. semi-annual paying coupon bond with a Face Value (FV) of $1 000 000, as she was attracted by the fixed income stream in order to fund her retirement expenses. a) What is the price of this bond in 2019 (5 years remaining) at a current market interest rate of 1.60% p.a.? Show formula, variables, calculation and a concluding statement in your response. b) Describe the relationship between bond prices and interest rates. c) Ray decided to sell the bond from part a) and will invest the proceeds by buying blue chip shares. Explain whether this is wise by Ray by discussing the advantages and disadvantages of shares.
- Sven purchased a 5-year, semi-annual, 7%, $10,000 callable bond for $9,050. He believes that the company will call the bond after 3 years. The issuer has to pay a premium of $50 per $1,000 of face amount if they call the bond early. What is the effective annual yield to call if the company does call the bond early? A. 10.79% B. 11.08% C. 12.31% D. 12.69%Loïc is planning to purchase a Treasury bond paying a (j2) coupon rate of 4.94% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Loïc purchased this bond on 8 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 9.32% p.a., compounded half-yearly. Loïc needs to pay 11.1% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half-year.Fatima buys an 11-year, $314,530, a zero-coupon bond with an annual YTM of 1.74%. If she sells the bond after 6 years for __________, she will have a __________ profit. A. $311,375.52 / negative B. $300,000.04 / negative C. $288,538.26 / positive D. $277,323.96 / positive