Question
In: Finance
23 A $1,000 par value bond was issued five years ago at a coupon rate of...
23
A $1,000 par value bond was issued five years ago at a coupon rate of 12 percent. It currently has 25 years remaining to maturity. Interest rates on similar debt obligations are now 14 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a. Compute the current price of the bond using
an assumption of semiannual payments. (Do not round
intermediate calculations and round your answer to 2 decimal
places.)
b. If Mr. Robinson initially bought the bond at
par value, what is his percentage capital gain or loss?
(Ignore any interest income received. Do not round
intermediate calculations and input the amount as a positive
percent rounded to 2 decimal places.)
c. Now assume Mrs. Pinson buys the bond at its
current market value and holds it to maturity, what will be her
percentage capital gain or loss? (Ignore any interest
income received. Do not round intermediate calculations and input
the amount as a positive percent rounded to 2 decimal
places.)
d. Why is the percentage gain larger than the
percentage loss when the same dollar amounts are involved in parts
b and c?
| The percentage gain is larger than the percentage loss because the investment is larger. | |
| The percentage gain is larger than the percentage loss because the investment is smaller. |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A $1,000 par value bond was issued five years ago at a coupon rate of 8...
A $1,000 par value bond was issued five years ago at a coupon
rate of 8 percent. It currently has 15 years remaining to maturity.
Interest rates on similar debt obligations are now 10 percent. Use
Appendix B and Appendix D for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
a. Compute the current price of the bond using
an assumption of semiannual payments. (Do not round
intermediate calculations and round your answer...
A $1,000 par value bond was issued five years ago at a coupon rate of 8...
A $1,000 par value bond was issued five years ago at a coupon
rate of 8 percent. It currently has 10 years remaining to maturity.
Interest rates on similar debt obligations are now 10 percent. Use
Appendix B and Appendix D for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
a. Compute the current price of the bond using
an assumption of semiannual payments. (Do not round
intermediate calculations and round your answer...
A $1,000 par value bond was issued five years ago at a coupon rate of 6...
A $1,000 par value bond was issued five years ago at a coupon
rate of 6 percent. It currently has 8 years remaining to maturity.
Interest rates on similar debt obligations are now 8 percent. Use
Appendix B and Appendix D for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
a. Compute the current price of the bond using
an assumption of semiannual payments. (Do not round
intermediate calculations and round your answer...
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 25 years ago at a 12 percent
coupon rate. It currently has 15 years remaining to maturity.
Interest rates on similar obligations are now 10 percent. Assume
Ms. Bright bought the bond three years ago when it had a price of
$1,040. Further assume Ms. Bright paid 20 percent of the purchase
price in cash and borrowed the rest (known as buying on margin).
She used the interest payments from the bond to...
A $1,000 par value bond was issued 30 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 30 years ago at a 12 percent
coupon rate. It currently has 25 years remaining to maturity.
Interest rates on similar obligations are now 8 percent. Assume Ms.
Bright bought the bond three years ago when it had a price of
$1,090. Further assume Ms. Bright paid 40 percent of the purchase
price in cash and borrowed the rest (known as buying on margin).
She used the interest payments from the bond to...
Five years ago, the City of Baltimore sold at par a $1,000 bond with a coupon...
Five years ago, the City of Baltimore sold at par a $1,000 bond
with a coupon rate of 8 percent and 20 years to maturity. If this
bond pays interest annually, what is the value of this bond to an
investor who requires an 8 percent rate of return?
A. $607.72
B. $692.00
C. $1,000
D. cannot be determined from the information given
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Five years ago Tosev Inc. issued 30-year, $1,000 par value, semi-annual coupon bonds with a coupon...
Five years ago Tosev Inc. issued 30-year, $1,000 par value,
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Due to...
A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in...
A company issued $1,000 par value bond at 6% coupon rate. The
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Group of answer choices
$951.68
$682.29
$973.36
$952.33
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but I don't know how to put in the financial calculator. can
someone write down each step
Ten years ago, a firm issued $1,000 par value, 30-year bonds with an 6.5% coupon rate...
Ten years ago, a firm issued $1,000 par value, 30-year bonds
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date of issuance. Assume semi-annual compounding.
a. Calculate the yield-to-maturity of these bonds today?
b. Calculate the yield-to-call on these bonds today?
Please show work!
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