Question

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.)

Answer #1

1) | Purchase price of the bond is the PV of the expected cash flows from | |

the bond from the time it was purchased till its maturity. | ||

The cash flows are: | ||

*The redeemable value of $53040 at t11 and | ||

*the semi-annual coupons of $2040 for 22 half years, which constitute | ||

and annuity. | ||

The discount rate is the market interest rate of 4.5% per half year. | ||

Hence, the purchase price = 53040/1.045^22+2040*(1.045^22-1)/(0.045*1.045^22) = | $ 48,259.56 | |

2) | Sale value = 51000*102.25% = | $ 52,147.50 |

3) | Loss on sale = 52147.50-48259.56 = | $ 3,887.94 |

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 $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.

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.

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 $5000, 14.5% bond with semi-annual coupons redeemable at par
on August 1, 2022, was purchased on March 5, 2011, at 95.5. What
was the approximate yield rate?
The approximate yield rate was?
(Round the final answer to four decimal places as needed. Round
all intermediate values to four decimal places as needed.)

A $5000, 14.5% bond with semi-annual coupons redeemable at par
on August 1, 2022, was purchased on March 5, 2011, at 95.5. What
was the approximate yield rate?
The approximate yield rate was %.
(Round the final answer to four decimal places as needed. Round
all intermediate values to four decimal places as needed.)

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 $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 $14,000 bond with a coupon rate of 8.50% is purchased 9 years
before maturity when the yield rate was 4.50% compounded
semi-annually. The bond coupons are paid every six months.
Calculate the purchase price of the bond.

Determine the purchase price at the indicated time before the
maturity of the following
bond redeemed at par shown in the table below.
Par-Value
Bond Rate Payable Semi-Annually
Time Before Redemption
Yield Rate
Conversion Period
$ 41,000
8%
7
years
8.5%
quarterly
The purchase price of the bond is $__.
(Round the final answer to the nearest cent as needed. Round
all intermediate values to six decimal places as needed.)

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