Question

During recessionary periods, bonds that were issued many years ago have a higher coupon rate than...

During recessionary periods, bonds that were issued many years ago have a higher coupon rate than currently issued bonds. Therefore, they may sell at a premium, a price higher than their face value, because of currently low coupon rates. A $50,000 bond that was issued 15 years ago is for sale for $58,000. What rate of return per year will a purchaser make if the bond coupon rate is 18% per year payable monthly, and the bond is due 5 years from now?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SOLUTION:-

THANK YOU

If any quearies please leave your valuable comment on comment box.......

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Braemar Corp. issued 30 year bonds 2 years ago at a coupon rate of 7.1%. The...
Braemar Corp. issued 30 year bonds 2 years ago at a coupon rate of 7.1%. The bond makes semi annual payments. If these bonds currently sell for 105% of par/face value, what is the yield to maturity?
Braemar Corp. issued 30 year bonds 2 years ago at a coupon rate of 7.1%. The...
Braemar Corp. issued 30 year bonds 2 years ago at a coupon rate of 7.1%. The bond makes semi annual payments. If these bonds currently sell for 105% of par/face value, what is the yield to maturity.
Company B had issued 10-year bonds two years ago at the coupon rate 5.5%. The bond...
Company B had issued 10-year bonds two years ago at the coupon rate 5.5%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 4%. The face value of the bond is €1000. a) What is the coupon payment each year? b) Calculate the current bond price. Is this premium or a discount bond? Explain
Wolverine Corp. issued 13-year bonds 2 years ago at a coupon rate of 9.4 percent. The...
Wolverine Corp. issued 13-year bonds 2 years ago at a coupon rate of 9.4 percent. The bonds make semiannual payments and carry a face value of $1,000. If these bonds currently sell for $980, what is the YTM? Group of answer choices 8.73% 11.64% 9.70% 10.67% 4.85%
Alco issued a 20 year bond two years ago the coupon rate was 7.10% the bonds...
Alco issued a 20 year bond two years ago the coupon rate was 7.10% the bonds make semi-annual payments the par value is $1,000 the bond sell for 105% of par what is the yield to maturity?
Heginbotham Corp. issued 20-year bonds two years ago at a coupon rate of 5.3 percent. The...
Heginbotham Corp. issued 20-year bonds two years ago at a coupon rate of 5.3 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?
Ngata Corp. issued 18-year bonds 2 years ago at a coupon rate of 10.1 percent. The...
Ngata Corp. issued 18-year bonds 2 years ago at a coupon rate of 10.1 percent. The bonds make semiannual payments. If these bonds currently sell for 100 percent of par value, the YTM is percent.
West Corp. issued 14-year bonds 2 years ago at a coupon rate of 9.8 percent. The...
West Corp. issued 14-year bonds 2 years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?
West Corp. issued 16-year bonds 2 years ago at a coupon rate of 9.7 percent. The...
West Corp. issued 16-year bonds 2 years ago at a coupon rate of 9.7 percent. The bonds make semiannual payments. If these bonds currently sell for 96 percent of par value, what is the YTM
Andys bank issued 22year bonds 3 years ago at a coupon rate of 7.62% , the...
Andys bank issued 22year bonds 3 years ago at a coupon rate of 7.62% , the bonds make semiannual payments , if these bonds currently sell for 103 percent of par value, what is the YTM
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT