Question

Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor...

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?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Yes, Return bond meet the requirement of Investor B

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
Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor...
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...
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...
(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...
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...
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...
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....
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...
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 for the next 4 years. If the bond dividend is in fact paid for the following 5 years (after the 4 years) and the investor then sells 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...
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...
"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.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT