Question

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.

Answer #1

Maturity Value = $15,000

Annual Coupon Rate = 8.00%

Semiannual Coupon Rate = 4.00%

Semiannual Coupon = 4.00% * $15,000

Semiannual Coupon = $600

Time to Maturity = 7 years

Semiannual Period = 14

Annual Yield = 7.00%

Semiannual Yield = 3.50%

Issue Value = $600 * PVIFA(3.50%, 14) + $15,000 * PVIF(3.50%,
14)

Issue Value = $600 * (1 - (1/1.035)^14) / 0.035 + $15,000 *
(1/1.035)^14

Issue Value = $600 * 10.920520 + $15,000 * 0.617782

Issue Value = $15,819

Premium on Bonds = Issue Value - Maturity Value

Premium on Bonds = $15,819 - $15,000

Premium on Bonds = $819

A $7,000, 10% bond redeemable at par with semi-annual
coupons bought nine years before maturity to yield 9% compounded
semi-annually is sold four years before maturity at 93.625.
Find the gain or loss on the sale of the bond.
(Round the final answer to the nearest cent as needed. Round
all intermediate values to six decimal places as needed.)

A $10 000, 8.2% bond with semi-annual coupons is purchased 3
years before maturity. Calculate the discount or premium if the
bond is sold to yield 6% compounded semi-annually.

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.

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.

A $51,000, 88% bond redeemable at 104 with semi-annual
coupons bought eleven years before maturity to yield 9% compounded
semi-annually is sold three years before maturity at 102.25. Find
the gain or loss on the sale of the bond.
(Round the final answer to the nearest cent as needed. Round
all intermediate values to six decimal places as needed.)

Brady purchased a $25 000, 10.5 percent bond redeemable at par
with semi-annual coupon payments. He purchased the bond 10 years
before maturity to yield 12 percent compounded semi-annually. Six
years after purchasing the bond (four years before maturity), what
would be his selling price if the yield to maturity has not
changed?

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?

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 $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.

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.

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