Question

A $4,500 bond pays interest at 7% compounded semi-annually. The bond is redeemable in 1 year...

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%.

  1. Find the purchase price of the bond.
  2. Calculate the premium or discount.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

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
A $8000 bond that pays 6% semi-annually is redeemable at par in 18 years. Calculate the...
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.
A $1000 bond bearing interest at 8% payable semi-annually redeemable at par on February 1, 2020,...
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.
Mr. Simpson buys a $1000 semi-annual coupon bond paying interest at 11.3%/year compounded semi-annually and redeemable...
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...
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.
Mr. Simpson buys a $1000 semi-annual coupon bond paying interest at 6.8%/year compounded semi-annually and redeemable...
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?
Lionel purchased a $5,000 bond that was paying a coupon rate of 4.40% compounded semi-annually and...
Lionel purchased a $5,000 bond that was paying a coupon rate of 4.40% compounded semi-annually and had 8 more years to mature. The yield at the time of purchase was 5.80% compounded semi-annually. a. How much did Lionel pay for the bond? Round to the nearest cent b. What was the amount of premium or discount on the bond? (click to select)Premium or Discount amount was ____ Round to the nearest cent
A $85,000 bond with a coupon rate of 7.00%, payable semi-annually, is redeemable in 12.5 years....
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
A $50,000, 9.00% bond redeemable at par, with annual coupon payments, is purchased 7 years before...
A $50,000, 9.00% bond redeemable at par, with annual coupon payments, is purchased 7 years before maturity to yield 6.00% compounded annually.   a. What was the purchase price of the bond? Round to the nearest cent b. What was the amount of discount or premium on the bond?
A $100,000, 8% bond with interest payable quarterly is redeemable at 98(1/8) in 6 years. What...
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
The market price of a bond is $900 for a 10-year bond that pays interest semi-annually...
The market price of a bond is $900 for a 10-year bond that pays interest semi-annually at a coupon rate of 6% per annum. What is the bond’s expected return, stated on an annual basis compounded semi-annually? What is the bond’s expected return, stated on an annual basis compounded annually?  Show steps on how to solve using excel and the formulas used as well as manually how to solve it
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT