A fixed interest stock pays an annual coupon of 9.1% per annum 4 monthly in arrears and is redeemed at 95% at any time between 6 and 15 years from the date of isssue at the option of the borrower. Calculate, to 2 decimal places, the ex-dividend price (per £350,000 nominal) 1 month before the first coupon payment that should be paid by an investor requiring a net redemption yield of 6.2% per annum effective. Assume that the investor is subject to income tax at a rate of 23%. Answer:

A fixed interest stock pays an annual coupon of 9.1% per annum 4 monthly in arrears and is redeemed at 95% at any time between 6 and 15 years from the date of isssue at the option of the borrower. Calculate, to 2 decimal places, the ex-dividend price (per £350,000 nominal) 1 month before the first coupon payment that should be paid by an investor requiring a net redemption yield of 6.2% per annum effective. Assume that the investor is subject to income tax at a rate of 23%. Answer:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Qu A fixed interest stock pays an annual coupon of 9.1% per annum 4 monthly in arrears and is redeemed at 95% at any time between 6 and 15 years from the date of isssue at the option of the borrower. Calculate, to 2 decimal places, the ex-dividend price (per £350,000 nominal) 1 month before the first coupon payment that should be paid by an investor requiring a net redemption yield of 6.2% per annum Fini effective. Tim Assume that the investor is subject to income tax at a rate of 23%. Answer:
A fixed interest stock is redeemable at 108% if it has an optional redemption date that falls within the range of 8 to 16 years from the date of issue. It pays half-yearly in arrears on coupons at a rate of 6.5% annually. An investor receives a net effective return of 6.0% per half-year when they buy a £25,000 nominal bond with-dividend four months after it is issued, subject to 28% income tax and 25% capital gains tax. Determine the investor's payment amount to two decimal places. correct answer = 12324.04 (no tables, only formulas)
An investor is purchasing at issue 10,000 nominal a bond with an optional term between 10 years and 27 years that is redeemable at 112%. The bond pays coupons of 4.5% per annum at every 4 months in arrears. Assuming that the investor is subject to 11% income tax and is looking to obtain a net redemption yield of 6.9% per annum, calculate, to 2 decimal places, the price paid by the investor.
What would be the one-year Holding Period Return for a 7-year, 8% semi-annual coupon bond if the discount rate at the time of sale (T1) has increased to 10%? The bond was purchased at initial issue (TO) for $1,000 and sold exactly one year later
What is the Macaulay duration in years of a 3% coupon bond with 2 years to maturity and a face value of $100? Assume the bond is trading at a yield of 7%, and that coupons are paid semi-annually. Assume semi-annual compounding. Round your answer to 2 decimal places.
An investor with an investment horizon of 1.4 year(s) purchases a 5% coupon bond with 2 years to maturity and a face value of $100. The bond is trading at a yield of 7%. Coupons are paid semi-annually. What is this investor's duration gap? Assume semi-annual compounding. Round your answer to 4 decimal places.
Suppose you have a 9%, 20-year bond traded at $1,350. If it is callable in 5 years at $1,060, what is thebond’s yield to call? Interest is paid semiannually
What is the yield to maturity on a 9 percent coupon (paid semiannually) bond, with a $1,000 face value and 15 years remaining to maturity, if it is currently selling at $985?
Bonds of Francesca Corporation with a par value of $1,000 sell for $960, mature in five years, and have a 7 percent annual coupon rate paid semiannually. Calculate: a. Current yield b. Yield to maturity, to the nearest basis point (that is, x.xx percent) c. Horizon yield (or realized return) for an investor with a three-year holding period and a reinvestment rate of 6 percent over the period. At the end of three years, the 7 percent coupon bonds with two years remaining will sell to yield 7 percent.
What is the yield to maturity (expressed as APR with semi-annual compounding) for a three-year bond with a coupon rate of 10%, and coupons are paid semiannually? The face value of the bond is $1000, and the current trading price is $900.
The current price of a stock is £205 and the annual continuously compounding risk-free rate is 3%. A dividend will be paid every quartor for the next 3-years, with the first dividend occuring 3-months from now. The amount of the first dividend is £2.07, but each subsequent dividend will be 1% higher than the one previously paid. Calculate the theoretical value ofa 6-month forward contract on this stock. Enter a number to two decimal places.
A 15 years bond with annual coupon rate equal to 10% (paid semiannually), if the par value of the bond is JD 10,000, and the required rate of return forl similar risk level investments is 8%, and the bond is redeemable at JD facei value, what is the market value of the bond after three years of issuance?

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