Question

8. You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 60-month annuity due at a 7.85 percent annually. What will your monthly payment be? *

a. $1,736.22

b. $1255.29

c. $1450.87

d. $1,373.92

e. None of the above

9. Your uncle has $375,000 and wants to retire. He expects to live for another 25 years and to earn 7.5% on his invested funds. How much could he withdraw at the end of each of the next 25 years and end up with zero in the account? *

a. $28,843.38

b. $30,361.46

c. $31,959.43

d. $33,641.50

e. None of the above

10. Garvin Enterprises’ bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? *

a. 5.36%

b. 6.12%

c. 7.39%

d. 8.07%

e. None of the above

11. Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? *

a. 6.76%

b. 4.86%

c. 5.40%

d. 6.00%

e. None of the above

12. What would be the yield to call of a 14 percent coupon rate, $1,000 par value bond priced at $1,160 if the call can be made in four years at a price of $1,080? *

a. 10%

b. 11.6%

c. 10.64%

d. 14%

e. None of the above

Answer #1

Formulas:

Thank you and rate

You want to buy a new sports car from Muscle Motors for $59,000.
The contract is in the form of a 72-month annuity due at a 7.25
percent APR.
What will your monthly payment be?
A) $1,027.04 B) $986.77 C) $1,012.99 D) $956.56 E) $1,006.91

1. A Treasury bond has a 10% annual coupon and a 10.5%
yield to maturity. Which of the following statements is CORRECT?
*
a. The bond sells at a price below par.
b. The bond has a current yield less than 10%.
c. The bond sells at a discount.
d. a & c.
e. None of the above
2. J&J Company's bonds mature in 10 years, have a par value of
$1,000, and make an annual coupon interest payment of...

A bond has a $1,000 par value, 19 years to maturity, and pays a
coupon of 5.75% per year, semiannually. The bond can be called in
four years at $1,085. If the bond’s current yield is 5.54% per
year, what is its yield to call?
Question 10 options:
A)
6.82%
B)
6.76%
C)
6.61%
D)
6.91%
E)
6.56%

QUESTION 6 Keenan Industries has a bond outstanding with 15
years to maturity, an 8.25% nominal coupon, semiannual payments,
and a $1,000 par value. The bond has a 6.50% nominal yield to
maturity, but it can be called in 6 years at a price of $1,175.
What is the bond’s nominal yield to call? a. 7.18% b. 7.39% c.
6.03% d. 7.47% e. 8.04%

You want to buy a new sports car from Muscle Motors for
$37,000. The contract is in the form of an annuity due for 36
months at an APR of 9.50 percent.
What will your monthly payment be?

You want to buy a new sports car from Muscle Motors for
$36,000. The contract is in the form of an annuity due for 60
months at an APR of 9.75 percent.
What will your monthly payment be?
Multiple Choice
$739.26
$760.47
$754.34
$769.43
$716.63

You want to buy a new sports car from Muscle Motors for
$37,000. The contract is in the form of a 36-month annuity due at a
8.25 percent APR.
Required:
What will your monthly payment be?
rev: 09_17_2012
$1,163.72
$1,178.89
$1,155.77
$1,097.98
$1,132.66

You want to buy a new sports car from Muscle Motors for
$57,500. The contract is in the form of a 60-month annuity due at
an APR of 5.9 percent. What will your monthly payment be?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
Monthly Payment= ______

Jerome Corporation's bonds have 15 years to maturity, an 8.75%
coupon paid semiannually, and a $1,000 par value. The bond has a
6.50% nominal yield to maturity, but it can be called in 6 years at
a price of $1,115. What is the bond's nominal yield to call?
Select the correct answer.
a. 6.53%
b. 6.07%
c. 6.76%
d. 5.84%
e. 6.30%

NO NEED FOR EXPLANATION
14. Your brother has just invested in a discount bond that
offers an annual coupon rate of 9%, with interest paid annually.
The face value of the bond is $1,000 and the difference between its
yield to maturity and coupon rate is 4%. The bond matures in 8
years. What is the bond’s price? *
a. $808.05
b. $990.50
c. $750
d. $550
e. None of the above
13. Mining Fund has purchased a bond with...

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