Question

Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor A purchased the bond four years ago for $9,500. The bond coupon rate is 8 percent per year paid annually and Investor A has just received the dividend for year 4.Investor B has a MARR of 10% per year compounded semi-annually. Will the return on the corporate bond meet the Investor B’s MARR?

Answer #1

**Yes, Return bond meet the requirement of Investor
B**

Investor A has just sold a ten-year $10,000 corporate bond to
Investor B for $8,500. Investor A purchased the bond four years ago
for $9,500. The bond coupon rate is 8 percent per year paid
annually and Investor A has just received the dividend for year
4.
a) Draw the cash flow diagram for Investor A
b) Calculate the Rate of Return for Investor A
c) Draw the cash flow diagram for Investor B
d) Investor B has a MARR...

Investor A has just sold a ten-year $10,000 corporate bond to
Investor B for $8,500. Investor A purchased the bond four years ago
for $9,500. The bond coupon rate is 8
percent per year paid annually and Investor A has just received the
dividend for year 4.
Draw the cash flow diagram for Investor A
Calculate the Rate of Return for Investor A
Draw the cash flow diagram for Investor B
Investor B has a MARR of 10% per year...

(a) Consider a 14-year, 9.5%
corporate bond with face value $10,000. Assume that the bond pays
semi-annual coupons. Compute the fair value of the bond today if
the nominal yield-to-maturity is 11% compounded semi-annually.
(b) Consider a 11-year,
corporate bond with face value $1,000 that pays semi-annual coupon.
With the nominal yield-to-maturity equal to 10%, the bond is
selling at $802.5550. Find the coupon rate for this bond. Assume
that the market is in equilibrium so that the fair value...

A Treasury bond has a face value of $10,000, a coupon of 8%, and
several years to maturity. Currently this bond sells for $9,260,
and the previous coupon has just been paid. What is the forward
price for delivery of this bond in 1 year? Assume that the interest
rates for 1 year out are flat at 9% semiannually compounded. The T
Bond pays coupons semi-annually. If the forward is trading in the
market for $9,500 what will you do?

Joe is considering purchasing a ten-year bond that has a face
value of $10,000. The bond has a bond rate of 10% with bond
premiums paid quarterly (10%/yr/qtr). The bond has a remaining life
of four years. The seller is asking $9250 for the bond and Joe has
set a personal MARR of 12% compounded quarterly (12%/yr/qtr). Would
you recommend he purchase the bond? Justify your answer. (Note –
Assume Joe will own the bond until it matures..... this means...

A five-year corporate bond with a face value of $10,000 pays
interest at a coupon rate of 5.0%. The required return for
investing in this bond is 4.0%. At what market price will the bond
sell if the interest is paid semi-annually?

A $8,500 bond has a coupon rate of 7.25% compounded
semi-annually and 7 years until maturity. What is the yield to
maturity if the bond is purchased at $8,563.75? ___% Round to two
decimal places

An investor who purchased a $10,000 mortgage bond today paid
only $6,000 for it. The bond coupon rate is 8% per year, payable
quarterly, and the maturity date is 18 years from the year of
issuance. Because the bond is in default, it will pay no dividend
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the bond for $7000, what rate...

A 3.375%, 10-year bond with semi-annual coupon payments and a
face value of $10,000 has just been sold at par.
What are the cash flows to the bond?
What is the (annual) required return on the bond?
If a 10-year zero-coupon bond were marketed at the same
required return as in part b), what would be the price of a $10,000
face value bond?
Immediately after issuance, if the required return increases by
0.50% per year, compounded semi-annually, what will...

"An investor just purchased a 5-year $1,000 par value bond. The
coupon rate on this bond is 10% annually, with interest paid every
year. If the investor expects to earn 12% simple rate of return,
how much the investor should pay for it?"
Please explain the process thoroughly.

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