Question

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.

Answer #1

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

Cell reference -

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.

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.

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 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. 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 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?

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

Helen purchased a $1,500 bond that was paying a coupon rate of
5.20% compounded semi-annually and had 5 more years to mature. The
yield at the time of purchase was 6.70% compounded
semi-annually.
a. How much did Helen pay for the bond?
Round to the nearest cent
b. What was the amount of premium or discount
on the bond?
(click to select)PremiumDiscount
amount was
Round to the nearest cent

a
20 year, 8% coupon rate, $1,000 par bond that pays interest
semi-annually bought five years ago for $850. this bond is
currently sold for 950. what is the yield on this bond?
a.12.23%
b.11.75%
c.12.13%
d.11.23%
an increase in interest rates will lead to an increase in the
value of outstanding bonds.
a. true
b. false
a bond will sell ____ when coupon rate is less than yield to
maturity, ______ when coupon rate exceeds yield to maturity, and...

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