Question
In: Accounting
Company owner contributes 100,000, which is invested in a twenty year bond with a 5% coupon...
Company owner contributes 100,000, which is invested in a twenty year bond with a 5% coupon paid semi-annually. After six months the firm receives the coupon payment of 2500 and the market price has reached to 102,000. Show the balance sheet and income statement treatment under each of the following categorization: held for trading, available for sale, held to maturity.
Solutions
ekkarill92 answered 4 months agoRelated Solutions
The twenty-year bond yields 6.1% and has a coupon of 8.1%. If this yield to maturity...
The twenty-year bond yields 6.1% and has a coupon of 8.1%. If
this yield to maturity remains unchanged, what will be its price
one year hence? Assume annual coupon payments and a face value of
$100. (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
Price
$
b. What is the total return to an investor who
held the bond over this year? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 2...
June 30th: The company issues a 5-year bond with a face value of $100,000 and a...
June 30th: The company issues a 5-year bond with a face value of
$100,000 and a stated annual rate of 8%. Interest is due on June
30th each year. The market rate is 6% on the date of issuance.
Prepare the Journal Entry for June 1st, and the journal entry to
acrrue interest at year end. The effective interest method is used
to amorize bond premiums and discounts.
Suppose a twenty-year bond with a $1,000 face value that pays anannual coupon is priced...
Suppose a twenty-year bond with a $1,000 face value that pays an
annual coupon is priced at 1071.06 and has a yield to maturity of
7%. What is the coupon rate of the bond?
A 5-year zero-coupon bond must have a price that is _________________ a 10-year zero-coupon bond. A....
A 5-year zero-coupon bond must have a price that is
_________________ a 10-year zero-coupon bond.
A. higher than
B. lower than
C. equal to
Find the price of 10-year 5% coupon bond if the price of 10-year 7% coupon bond...
Find the price of 10-year 5% coupon bond if the price of 10-year
7% coupon bond is $107 and 10-year interest rate is 6.5%. All bonds
have $100 face value and pay semi-annual coupons.
Suppose a 5% coupon, 5-year bond is selling for $1100. The coupon is paid every six...
Suppose a 5% coupon, 5-year bond is selling for $1100. The
coupon is paid every six months. The principal value is $1000.
(1) Calculate the yield to maturity of this bond. .
(Hint: Use the Yield function in Excel.)
(2) Calculate the price of this bond if the yield to maturity
increases by 1% with maturity unchanged. .
(3) Calculate the price of this bond if the yield to maturity
decreases by 1% with maturity unchanged. .
Suppose a 5% coupon, 5-year bond is selling for $1100. The coupon is paid every six...
Suppose a 5% coupon, 5-year bond is selling for $1100. The
coupon is paid every six months. The principal value is $1000.
(1) Calculate the yield to maturity of this bond. .
(Hint: Use the Yield function in Excel.)
(2) Calculate the price of this bond if the yield to maturity
increases by 1% with maturity unchanged. .
(3) Calculate the price of this bond if the yield to maturity
decreases by 1% with maturity unchanged. .
A two-year coupon bond with a 5% coupon rate is valued at $916.79 and another two-year...
A two-year coupon bond with a 5% coupon rate is valued at
$916.79 and another two-year coupon bond with a 10% coupon rate is
valued at $1,007.13. Given this information, what will be the value
of a two-year bond with an 8% coupon rate? The par values of all
three bonds are $1,000.
A.
$1,076.95
B.
$1,039.63
C.
$970.99
D.
$1,004.36
E.
$937.89
Consider a 4-year, 5% annual coupon bond with a face value of $10,000, which was issued...
Consider a 4-year, 5% annual coupon bond with a face value of
$10,000, which was issued three years ago. The bond just paid the
coupon. Therefore, this bond has one year to maturity, and the next
payment of the face and coupon will be made in exactly one year,
after which the bond will cease to exist. If the bond defaults
before next year, it will pay total of $8,000 in one year. The
effective 1-year risk-free rate is 3.55%....
Your company has invested in an ABC semi-annual paying bond. The coupon is 10%, and the...
Your company has invested in an ABC semi-annual paying bond. The
coupon is 10%, and the current yield is 6.45%. Your friend contacts
you to advise that he is a big buyer of ABC bonds. He offers to buy
$25,000,000 of the bond from you at 6.50%. The maturity date of the
bond is the 15th of November, 2023. If you sell the bond, the
settlement date will be the 4th of November, 2019.
Calculate the duration and modified duration...
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