Question

A $8000 bond that pays 6% semi-annually is redeemable at par in 18 years. Calculate the purchase price if it is sold to yield 8% compounded semi-annually.

Answer #1

Bond Price Formula:

Where,

C = Periodic coupon payment,

P = Par value of bond,

r = Yield to maturity

n = Number of periods till maturity

a = compounding frequency (here it is semi annually, that is a
=2)

C = Par value * (coupon rate / 2)

= 8000 * 3%

= $240

Substituting the values, we get:

**Therefore, purchase price of the bond
is $6,487.34**

A $4,500 bond pays interest at 7% compounded semi-annually. The
bond is redeemable in 1 year 6 months, and is purchased to yield
8%.
Find the purchase price of the bond.
Calculate the premium or discount.

A $1000 bond bearing interest at 8% payable semi-annually
redeemable at par on February 1, 2020, was purchased on October 12,
2013, to yield 7% compounded semi-annually. Determine the purchase
price.

A $1000 bond bearing interest at 8% payable semi-annually
redeemable at par on February 1, 2020, was purchased on October 12,
2013, to yield 7% compounded semi-annually. Determine the purchase
price.

A $85,000 bond with a coupon rate of 7.00%, payable
semi-annually, is redeemable in 12.5 years. What was the purchase
price of the bond, when the yield rate was 5.00% compounded
semi-annually?
Round to the nearest cent

Mr. Simpson buys a $1000 semi-annual coupon bond paying interest
at 11.3%/year compounded semi-annually and redeemable at par in 16
years. Mr. Simpson's desired yield rate is 14.3%/year compounded
semi-annually. After 9 years he sells the bond. Interest rates have
dropped and the bond is sold to yield a buyer 12.8%/year compounded
semi-annually. Determine the sale price.

A $15 000, 8% bond with semi-annual interest coupons redeemable at
par in seven years is bought to yield 7% compounded semi-annually.
Determine the amount of premium or discount.

A $7,000, 10% bond redeemable at par with semi-annual
coupons bought nine years before maturity to yield 9% compounded
semi-annually is sold four years before maturity at 93.625.
Find the gain or loss on the sale of the bond.
(Round the final answer to the nearest cent as needed. Round
all intermediate values to six decimal places as needed.)

A $100,000, 8% bond with interest payable quarterly is
redeemable at 98(1/8) in 6 years. What is the purchase price to
yield 9% compounded semi-annually?
A. $96,470.91
B. $98,704.19
C. $95,846.53
D. $94,470.19
E. $94,740.91

Mr. Simpson buys a $1000 semi-annual coupon bond paying interest
at 6.8%/year compounded semi-annually and redeemable at par in 12
years. Mr. Simpson's desired yield rate is 9.8%/year compounded
semi-annually. How much did he pay for the bond?

Brady purchased a $25 000, 10.5 percent bond redeemable at par
with semi-annual coupon payments. He purchased the bond 10 years
before maturity to yield 12 percent compounded semi-annually. Six
years after purchasing the bond (four years before maturity), what
would be his selling price if the yield to maturity has not
changed?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 16 minutes ago

asked 27 minutes ago

asked 34 minutes ago

asked 54 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago