Question
In: Finance
In early January 2010, you purchased $19 comma 000 worth of some high-grade corporate bonds. The...
In early January 2010, you purchased $19 comma 000 worth of some high-grade corporate bonds. The bonds carried a coupon of 7 4/8% and mature in 2024.
You paid 95.463 when you bought the bonds. Over the five years from 2010 through 2014, the bonds were priced in the market as follows:
| Year | Beginning of the Year |
End of the Year |
Average Holding Period Return on High-Grade Corporate Bonds |
| 2010 | 95.463 | 104.824 | 7.30% |
| 2011 | 104.824 | 106.783 | 11.72% |
| 2012 | 106.783 | 108.567 | -6.89% |
| 2013 | 108.567 | 116.281 | 7.90% |
| 2014 | 116.281 | 128.181 | 9.11% |
Coupon payments were made on schedule throughout the 5-year period.
a. Find the annual holding period returns for 2010 through 2014.
b. Use the average return information in the given table to evaluate the investment performance of this bond. How do you think it stacks up against the market? Explain.
a. The holding period return for 2010 is nothing%. (Round to two decimal places.)
The holding period return for 2011 is nothing%. (Round to two decimal places.)
The holding period return for 2012 is nothing %. (Round to two decimal places.)
The holding period return for 2013 is nothing%. (Round to two decimal places.)
The holding period return for 2014 is nothing%. (Round to two decimal places.)
b. Use the average return information in the given table to evaluate the investment performance of this bond. How do you think it stacks up against the market? Explain.
The high-grade corporate bond investment has outperformed the market. The average rate of return for the investment is 13.21% versus the average market rate of 5.83%.
The market has outperformed the corporate bond investment. The average rate of return for the investment is 5.83% versus the average market rate of 13.21%.
Solutions
jeff jeffy answered 7 months agoRelated Solutions
In early January 2010, you purchased $45,000 worth of some high-grade corporate bonds. The bonds carried...
In early January 2010, you purchased $45,000 worth of some
high-grade corporate bonds. The bonds carried a coupon of 8 font
size decreased by 1 font size decreased by 1 font size decreased by
1 5/8 %(one and five eighths) and mature in 2024. You paid 94.312
when you bought the bonds. Over the five years from 2010 through
2014,
the bonds were priced in the market as follows:
Quoted Prices (% of $1,000 par value)
Year
Beginning
of the...
In early January 2010, you purchased $24,000 worth of some high-grade corporate bonds. The bonds carried...
In early January 2010, you purchased $24,000 worth of some
high-grade corporate bonds. The bonds carried a coupon of 6.5 % and
mature in 2024. You paid 96.086 when you bought the bonds. Over the
five years from 2010through 2014, the bonds were priced in the
market as follows:
Quoted Prices (% of $1,000 par value)
Year
Beginning
of the Year
End
of
the Year
Average
Holding Period Return on High-Grade Corporate Bonds
2010
96.086
102.673
7.30%
2011
102.673
104.365...
In early January 2010, you purchased $34,000 worth of some high-grade corporate bonds. The bonds carried...
In early January 2010, you purchased $34,000 worth of some
high-grade corporate bonds. The bonds carried a coupon of 7 4/8%
and mature in 2024. You paid 93.426 when you bought the bonds. Over
the five years from 2010 through 2014, the bonds were priced in
the market as follows: Coupon payments were made on schedule
throughout the 5-year period.
A. Find the annual holding period returns for 2010 through 2014.
(See Chapter 5 for the HPR formula.)
b. Use...
In early January 2010, you purchased $12,000 worth of some high-grade corporate bonds. The bonds carried...
In early January 2010, you purchased $12,000 worth of some
high-grade corporate bonds. The bonds carried a coupon of 7 6/8%
and mature in 2024. You paid 94.643 when you bought the bonds. Over
the five years from 2012 through 2014, the bonds were priced in the
market as follows: Coupon payments were made on schedule throughout
the 5-year period.
a. Find the annual holding returns for 2010 through 2014. (HPR
formula)
b. Use the average return information in the...
In early January 2014, you purchased $83,000 worth of some high-grade corporate bonds. The bonds carried...
In early January 2014, you purchased $83,000 worth of some
high-grade corporate bonds. The bonds carried a coupon of 7% and
mature in 2027. You paid 101.477 when you bought the bonds. Over
the five years from 2014 through 2018, the bonds were priced in
the market as follows:
Quoted Prices (% of $1,000 par value)
Year Beginning of the Year End of the
Year Average Holding Period Return on High-Grade
Corporate Bonds
2014 101.477 110.926 -8.90%
2015 ...
Paper Printing Company purchased a copy machine for $ 65 comma 000$65,000 on January 1, 2010....
Paper Printing Company purchased a copy machine for
$ 65 comma 000$65,000
on January 1, 2010. The copy machine had an estimated useful
life of five years or
1 comma 000 comma 0001,000,000
copies. Paper Printing estimated the copy machine's salvage
value to be
$ 5 comma 000$5,000.
The company made
250 comma 000250,000
copies in 2010 and
190 comma 000190,000
copies in 2011.Requirements
LOADING...
1. Calculate the depreciation expense for each
year using the straight line method.
-
=...
A business purchased equipment for $ 125 comma 000$125,000 on January? 1, 2019. The equipment will...
A business purchased equipment for
$ 125 comma 000$125,000
on January? 1, 2019. The equipment will be depreciated over the
five years of its estimated useful life using the
straightminus?line
depreciation method. The business records depreciation once a
year on December 31. Which of the following is the adjusting entry
required to record depreciation on the equipment for the year?
2019? (Assume the residual value of the acquired equipment to be?
zero.)??
A.
Debit
$ 125 comma 000$125,000
to Depreciation...
On January 1, 20142014, Small RockSmall Rock Brewery purchased a van for $ 37 comma 000$37,000....
On January 1,
20142014,
Small RockSmall Rock
Brewery purchased a van for
$ 37 comma 000$37,000.
Small RockSmall Rock
expects the van to have a useful life of
eighteight
years and a residual value of
$ 4 comma 000$4,000.
The depreciation method used was straight-line. On December
31,
20172017,
the van was sold for
$ 21 comma 000$21,000
cash.
1. What was the carrying amount of the van at the date of
sale?
2. Record the sale of the van...
KLM Ltd purchased new equipment on 1st January 2010, at a cost of $420 000 net...
KLM Ltd purchased new equipment on 1st January 2010, at a cost
of $420 000 net of GST. The company estimated that the equipment
had a useful life of 5 years and a residual value of $45 000.
Required Assuming a financial year ending 30th June, calculate the
amount of depreciation expense for each year ending 30th June 2010
through to 30th June 2015, with each of the following methods: (a)
straight line 2 marks (b) sum-of-years-digits 4 marks (c)...
You are examining three bonds with a par value of $1000 (you receive $1 comma 000...
You are examining three bonds with a par value of $1000 (you
receive $1 comma 000 at maturity) and are concerned with what
would happen to their market value if interest rates (or the
market discount rate) changed. The three bonds are
Bond A-bond with 6 years left to maturity that has an annual
coupon interest rate of 12 percent, but the interest is paid
semiannually. Bond B-bond with 9 years left to maturity that has an
annual coupon interest...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
- Decision Variables S T Minimize 1.8S + 2.20T Subject to: Potassium 5S + 8T >= 200...
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
ADVERTISEMENT