Question

8. Your broker is suggesting that you purchase a 20-year Industrial Business Machines bond that is selling for $9,120. The face value on the bond is $10,000 and your broker tells you that the bond has a yield to maturity of 10.7%. You are interested in knowing what type of interest payment you will receive each year while you are holding the bond. If Industrial Business Machines makes annual interest payments, what is the coupon rate on the bond and how large will each coupon interest payment be?

Answer #1

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**SOLVED WITH BA II PLUS
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Your broker is suggesting that you purchase a 10-year Ford Motor
Company bond that is selling for $973.88. The par value of the bond
is $1,000 and your broker tells you that the bond has a yield to
maturity of 7.40%. If the bond pays annual coupon payments, what is
the coupon rate on the bond?
a. 6.541% b. 7.021% c. 7.212% d. 7.572% e. 6.889%

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require an 10.7% nominal yield to maturity on this investment,
what is the maximum price you should be willing to pay for the
bond?
a.
$874.74
b.
$721.44
c.
$1,000.99
d.
$901.80
e.
$910.81

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual
interest payments. If you require a 10.7% nominal yield to maturity
(YTM) on this investment, what is the maximum price you should be
willing to pay for the bond?
(Please show work and explain formula of how you got this answer
NOT on excel)

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require a 10.7% nominal yield to maturity (YTM) on this
investment, what is the maximum price you should be willing to pay
for the bond?
Please show how this problem can be solved without a financial
calculator.

Suppose that at t=0, you purchase a six year, 8% coupon bond
paid annually that is priced to yield 9%. The face value of the
bond is $1000.
a) What will be your holding period return if you decide to hold
the bond til its maturity and the market interest rate remains
constant at 9% throughout your holding period of 6 years? b) What
will be your holding period return if you decide to hold the bond
til its maturity,...

Your broker offers you the opportunity to purchase a bond with
coupon payments of $90 per year and a face value of $1,000. If the
yield to maturity on similar bonds is 8%, this bond should: A) Sell
for the same price as the similar bond regardless of their
respective maturities. B) Sell at a premium. C) Sell at a discount.
D) Sell for either a premium or a discount but it's impossible to
tell which. E) Sell for par...

Suppose that you bought a four year coupon bond with $10,000
face value, 6% coupon rate and 7% yield to maturity. After holding
it for a year and collecting the first coupon payment you decide to
sell it. Calculate the return (in %) on this investment if the
interest rate has just
dropped to 5%.
With Formula's Please

1. A 3-year annual coupon bond has a yield to maturity of 8%,
coupon rate of 5%. The face value of the bond is $1,000.
a. What is the price of the bond? Is it premium bond or discount
bond?
b. Suppose one year later immediately after you receive the
first coupon payment, the yield to maturity drops to 7%. What would
be your holding period return if you decide to sell the bond at the
market price then?
c....

assume that you were considering the purchase of a 20 year
non-callable bond with an annual coupon rate of 9.5% the bond has a
face value of $1000 and it makes semi annual interest payments. if
you require a 9.5% nominal yield to maturity on this investment
what is the maximum price you should be willing to pay for the
bond?

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semi-annual interest payments.
If you require a yearly 7.4% nominal yield to maturity on this
investment, what is the maximum price you should be willing to pay
for the bond?
Group of answer choices
$1,262.11
$1,217.43
$1,126.76
$1,161.67

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