Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
A bond with par value of 1,000 has payment dates of April 15 and October 15. The nominal coupon
rate convertible semiannually is 8%. The bond matures on October 15, 2012. On April 15, 2010, a
coupon payment of 40 was made. The bond is sold 80 days later on the settlement date of July 4,
2010 to yield 6% convertible semiannually. There are 183 days between April 15, 2010 and October
15, 2010. Find the market price on July 4, 2010 if compound interest is used in finding the purchase
price but simple interest is used in computing the accrued coupon.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- A coupon bond that pays semiannual interest is reported in the Wall Street Journal as having an ask price of 93% of its $1,000 par value. If the last interest payment was made 55 days ago, and this interest period has 183 days, and the coupon rate is 4.25%, what is the invoice price of the bond? Enter your answer to to 2 decimal places.arrow_forwardThe Sisyphean Company has a bond outstanding with a face value of $5,000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 8.9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.7%, then the price that this bond trades for will be closest to: A. $4,524 Your answer is correct. B. $3,619 C. $6,334 D. $5,429arrow_forwardA bond with a 7% coupon rate makes payments on January 15 and July 15 of each year (182-day coupon period). On January 30, the ask price for the bond was reported as 100:02. On April 15, it was selling at an ask price of 101:04. What is the bond's invoice price on January 30? If you purchased the bond from a dealer on April 15, what price would you have to pay for it? (Note: Bond quotes are always at a percentage of the face value. Therefore, 103:05 must be read as 103.05% of face value, so the quoted price is $1,030.5.)arrow_forward
- A bond with a face value of $1,000 was issued at par (sold for its face value) 5 years ago when market interest rates were 3.6% p.a. (compounded annually). It now has exactly 3 years remaining until it matures. If it pays coupon interest annually, and current market rates are 2.4% p.a. (B.E.Y. convention – all maturities), calculate the duration of the bond.arrow_forwardA 113. Subject:- financearrow_forwardThe Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 9 years. The bond certificate indicates that the stated coupon rate for this bond is 5%and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 7.3%, then the price of this bond will be: The price of the bond is: $ (round to two decimal places)arrow_forward
- A bond that has a face value of $1,500 and coupon rate of 3.20% payable semi-annually was redeemable on July 1, 2021. Calculate the purchase price of the bond on February 10, 2015 when the yield was 3.70% compounded semi-annually. $0.00arrow_forwardA bond that has a face value of $2,500 and coupon rate of 2.50% payable semi-annually was redeemable on July 1, 2021. Calculate the purchase price of the bond on February 10, 2015 when the yield was 2.75% compounded semi-annually. $0.00 Round to the nearest centarrow_forwardThe Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 9.7% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $1,010, then the YTM for this bond is closest to: A. 11.4% B. 7.6% C. 13.3% D. 9.5%arrow_forward
- Richmond Pty Ltd has issued a 14 year bond with a par value of $1000. The bond makes annual coupon payment. The bond is currently trading at $1,001 and the current market rate is 8.7% (APR). Calculate the bond's annual coupon rate (in percentage)arrow_forwardOn February 9, 2015, Hunter-Gratzner, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $42. We will assume that the 2022 coupon has just been redeemed. Initially (in 2015), the bond was sold at the premium price of $1,037. On February 9, 2022, this bond was selling for $972. The market rate of interest for a riskless corporate bond, of this maturity (i.e., a U.S. Treasury security), was 1.75% on February 9, 2015, which reflected market expectations about future rates of inflation. The market rate of interest for a riskless corporate bond, of this maturity (i.e., a U.S. Treasury security), was 2.05% on February 9, 2022, which reflects market expectations about future rates of inflation. Question: What was the yield to maturity for this bond on February 9, 2015? [To 2 decimal places.]arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education