Question

Joe is considering purchasing a ten-year bond that has a face value of $10,000. The bond has a bond rate of 10% with bond premiums paid quarterly (10%/yr/qtr). The bond has a remaining life of four years. The seller is asking $9250 for the bond and Joe has set a personal MARR of 12% compounded quarterly (12%/yr/qtr). Would you recommend he purchase the bond? Justify your answer. (Note â€“ Assume Joe will own the bond until it matures..... this means it will be redeemed for face value)

Answer #1

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 Bâ€™s
MARR?

A bond with a face value of $1000 makes quarterly payments of
$20. The bond is currently selling for $1047.83 and has 10 years
remaining until maturity. What is the bond's
official yield-to-maturity? Write your answer out
to four decimals - for example, write 6.18% as .0618.

Mr.
Bond is considering purchasing a bond with 10-year maturity and
$1,000 face value. The coupon interest rate is 8% and the interest
is paid annually. If Mr. Bond requires 11% yield to maturity (YTM)
on the investment, then the price of the bond
is:
$877.11
$773.99
$1,122.87
$823.32

Ms. Jimenez is considering purchasing a bonus
(bono)(bond) that has a face(nominal) value of $ 5,000. The
bonus(bono)(bond)
pays 4% interest per year and premium(prima) payments are
semi-annual.
How much is the maximum he should be
willing to pay for the bonus(bono)(bond) if you want to pay at
least 10% compounded semi-annually on your investments.
Show the flow chart of this investment alternative from the buyer's
perspective (Ms. Jimenez).
Determine the maximum price that the investor should be willing to...

An annual bond has a face value of $10,000, a coupon rate of
11.9%, a yield to maturity of 7.5% and has 12 years remaining to
maturity. What is the price of the bond?

A bond with a face value of $ 1,000 and a quarterly coupon of
14%, matures in 10 years. If your required rate of return is 12%,
how much would you be willing to pay for the bonus today?

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.
Draw the cash flow diagram for Investor A
Calculate the Rate of Return for Investor A
Draw the cash flow diagram for Investor B
Investor B has a MARR of 10% per year...

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.
a) Draw the cash flow diagram for Investor A
b) Calculate the Rate of Return for Investor A
c) Draw the cash flow diagram for Investor B
d) Investor B has a MARR...

A
bond with a $1,000 face value and a 9 percent annual coupon pays
interest annually. The bond matures in 12 years.
A. Determine the value of the bond to a friend of yours with a
required rate of return of 11%?
B. A zero-coupon bond with similar risk is selling for $300.
The bond has a face value of $1,000 and matures in 12 years. Your
friend asks you which bond she should invest in, the zero coupon
bond...

BSW Corporation has a bond issue outstanding with an annual
coupon rate of 6.6 percent paid quarterly and four years remaining
until maturity. The par value of the bond is $1,000. Determine the
fair present value of the bond if market conditions justify a 14
percent, compounded quarterly, required rate of return

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