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?

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%

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 $86,000.
The contract is in the form of a 72-month annuity due at an APR of
6.8 percent. What will your monthly payment be? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)

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= ______

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