Question

48. An investor purchased a $1000 face value bond for $925. The bond has an 8...

48. An investor purchased a $1000 face value bond for $925. The bond has an 8 percent coupon rate, paid annually, and matures in five years. The investor sold the bond one year later for $965, while the price level was increasing at 5 percent. Calculate the pre-tax real realized rate of return on the investment?

a. -.7%

b. 8%

c. 3%

d. 5%

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You purchased a bond for $925 The bond has a coupon rate of 8 ​percent, which...
You purchased a bond for $925 The bond has a coupon rate of 8 ​percent, which is paid semiannually. It matures in 14 years and has a par value of 1000 . What is your expected rate of​ return? Your expected rate of return is ?
An investor is considering the purchase of a $1000 par value bond with an 8% coupon...
An investor is considering the purchase of a $1000 par value bond with an 8% coupon rate (with interest paid semiannually) that matures in 5 years. If the bond is priced to yield 6%. What is the bonds current price?
A company has a 10% bond that has a face value of $1000 and matures in...
A company has a 10% bond that has a face value of $1000 and matures in 10 years. Assume that coupon payments are made semi-annually. The bonds can be called after 5 years at a premium of 5% over face value. What is the value of the bond if rates drop immediately to 8%?
7. Pablo just purchased a bond for $1,024.75. The bond has a face value of $1,000...
7. Pablo just purchased a bond for $1,024.75. The bond has a face value of $1,000 and a 10 percent coupon rate, with coupon interest paid annually. Pablo’s broker told him that the yield to maturity on this bond is 9.5%; however, the broker did not tell him when the bond would mature. Calculate how many years this bond has left until it matures.
A bond has a coupon ate of 10%, a 1000$ face value, matures in 5 years,...
A bond has a coupon ate of 10%, a 1000$ face value, matures in 5 years, has a yield of maturity of 15% percent and pays interest annually. What is the current yield?
A bond has a face value $1000, maturity of 10 years, and a coupon rate of...
A bond has a face value $1000, maturity of 10 years, and a coupon rate of 8%, paid semi-annually. Assuming the yield-to-maturity is 10%, the current price of the bond is:
An investor has two bonds in his portfolio that have a face value of $1000 and...
An investor has two bonds in his portfolio that have a face value of $1000 and pay a 10% annual coupon. Bond A matures 20 years and Bond B matures in 5 years. a) Estimate the value of each bond if the required return is 9% b)Estimate the value of each bond of the required return is 11%. (Please explain the answer in detail, thank you)
Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor...
Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor A purchased the bond four years ago for $9,500. The bond coupon rate is 8 percent per year paid annually and Investor A has just received the dividend for year 4.Investor B has a MARR of 10% per year compounded semi-annually. Will the return on the corporate bond meet the Investor B’s MARR?
1. A semiannual coupon bond with a coupon rate of 7% and face value of $1000...
1. A semiannual coupon bond with a coupon rate of 7% and face value of $1000 trades at $1250. It matures in 12 years. What is its yield to maturity (YTM)? Answer in percent and round to two decimal places. 2. A 5 year semiannual coupon bond with a face value of $1,000 trades at $902. The market-determined discount rate is 7%. What is the coupon rate? Answer in percent and round to two decimal places.
An investor purchased a bond for $550 that has the following cash flows: the principal is...
An investor purchased a bond for $550 that has the following cash flows: the principal is $600, over n = 5 years the bond will pay 8% coupon annually. Find the IRR of these cash flows (also called Yield to Maturity):Note: the principal is the amount that a bond pays at the end of its maturity (5-th year in this case) and the coupon is just a periodic payment equal to “coupon rate” * “Principal” (0..08*600 = $48 in this...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT