Question

A $ 10,000 bond is purchased that pays premiums at a rate of 6% compounded semi-annually and matures in two years. He pays $ 9,600 for the instrument. Which of the following subsections is true regarding the bond?

-The corresponding cash flows will be: Period 0: $ 9,600, Period 1: $ 300, Period 2: $ 300, Period 3: $ 300, Period 4: $ 9,900 and the bond would have a rate of return of less than 10%. -The corresponding cash flows will be: Period 0: $ 9,600, Period 1: $ 300, Period 2: $ 300, Period 3: $ 300, Period 4: $ 10,300 and the bond would have a rate of return greater than 10%. -The corresponding cash flows will be: Period 0: $ 9,600, Period 1: $ 300, Period 2: $ 300, Period 3: $ 300, Period 4: $ 10,300 and the bond would have a rate of return of less than 10%. -The corresponding cash flows will be: Period 0: $ 9,600, Period 1: $ 300, Period 2: $ 300, Period 3: $ 300, Period 4: $ 9,900 and the bond would have a rate of return greater than 10%.

Answer #1

A bond that yields 6% pays a coupon of $30 semi-annually. Which
of the following is most likely the price of the bond?
$990
$1000
$1050
Not enough information to determine.
5 points
QUESTION 2
Investors with very high tax rates usually prefer municipal
bonds because of the tax benefit.
True
False
5 points
QUESTION 3
A bond that sells for greater than $1000 when yields are 10%
must have an annual coupon that is greater than $100....

How much would you be willing to pay today for an investment
that pays the following cash flows at the end of each of the next 4
years if your required rate of return is 9% per year?
Period Cash
Flow
0
$0
1
$100
2
$200
3
$300
4
$400

6. You are an investor and have just purchased a bond on July 1
which pays interest every March 1 and September 1. When you receive
your first interest cheque, you will receive and have earned how
many months interest?
Received
Earned
1
6
6
2
6
2
3
2
2
4
4
4
Choice 1
Choice 2
Choice 3
Choice 4
8. KR Corporation was involved in a lawsuit with the Government
alleging inadequate air pollution control facilities at...

10) Joanna invests $10,000 in a bond that pays 8% interest,
compounded annually (1 time per year).
How much does Joanna have after 1 year?
9) Nancy invest $10,000 in a bond that pays 8% interest,
compounded quarterly (4 times per year). How much does Nancy have
after 1 year?
10) Adam invests $10,000 in a high yield savings account that
pays 3% interest, compounded monthly. How much does Paul have after
1 year?
11) Raza buys 1 share of...

A 6-year 5% bond is selling to yield 6%. The bond pays interest
semi-annually. Using the approximate formula 1. What is the
estimated bond price for 150 basis points decrease in the yield,
using approximate duration formula to estimate the new price? 2.
What would explain the difference between the estimated bond price
and the actual bond price you find using the financial calculator?
3. How can you correct the mispricing? Please provide calculations
for the correction.

One year ago, you bought a bond at a price of $992.6000.The bond
pays coupons semi-annually, has a coupon rate of 6% per year, a
face value of $1,000 and would mature in 5 years. Today, the bond
just paid its coupon and the yield to maturity is 8%. What is your
holding period return in the past year? (suppose you did not
reinvest coupons)

A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 5%?
2. A $1,000 par-value bond with 5 years of
maturity pays a 5% coupon rate, paid semi-annually. What is the
value of the bond if your required rate of return is 5%?
3. A $1,000 par-value bond with 5
years of maturity pays a 5% coupon rate, paid semi-annually. What...

assume a $1000 face value bond has a coupono rate of 8.5% , pays
interest semi-annually, and has an eight year life. if investors
are willing to accept a 10% rate of return on bonds of eszsimilar
quality, what is the present value

For an interest rate of 10% compounded annually, evaluate the
value of “X” from the cash flows given in table below.
Year
0
1
2
3
4
5
Cash Flows
-10000+x
1600
1700
1800
1900
3500
If someone could explain how to solve this problem I would
appreciate it, as I am struggling in this class. Thank you

What is the price of a bond with a coupon rate of 6%, payable
semi-annually, a face value of $1000, 5 years to maturity, and a
yield to maturity of 5.7%?
Consider a firm that has a debt-equity ratio of 1/3. The rate of
return for debt is 7% and the rate of return for equity is 14%. The
corporate tax rate is 30%. What is the weighted average cost of
capital? Enter your answer as a percentage and rounded...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 11 minutes ago

asked 18 minutes ago

asked 49 minutes ago

asked 51 minutes ago

asked 55 minutes ago

asked 55 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago