corporate bond is under sale now.  If you buy the bond, you will receive $1 million (including principal and interest) after 1 year.  Three investors are competing to buy the bond.  They have different required rates of return as shown below.  Who would win the competition and buy the bond? Mr. A:  2% Mr. B:  3% Mr. C:  4%

Suppose your friend tells you that she recently purchased a 5-year $2,000.00 bond with a 9% coupon. A month later, she saw it quoted at 91:12, but she does not know what this means. You can tell by the way the bond is priced that she has a    bond; otherwise it would have been priced    . You explain that the market price of her bond is now    , meaning it is now a    bond.   Based on the market price of the bond you calculated, you can tell that market interest rates have gone    since the bond was issued. The current yield of the bond is now    .

Investor Dan has $607,000 to invest in bonds.  Bond A yields an average of 8.5% and the bond B yields 8.4%.  Dan requires that at least 4 times as much money be invested in bond A as in bond B.  You must invest in these bonds to maximize his return.  How much should you invest in bond A? $                       .  Round to the NEAREST CENT.

Suppose that you invested in a twenty-year zero coupon bond with a face value of $1000. The bond originally cost $543. It is now 4 years later. Suppose that today (four years later) comparable bonds are yielding 4.5%, if you sold the bond today, would you have a capital gain or loss? A. Capital Gain >$120 B. Capital Loss >$120 C. Capital Gain <$120 D. Capital Loss<$120 E. No Gain or Loss

An investor has a cash of $29,379,685 at disposal. He wants to invest in a bond with $1,000 nominal value and whose dirty price is equal to 101.36%. What is the number of bonds he will buy? Round to the nearest integer. Blank Excel Worksheet Your Answer: Answer

Western Entertainment is considering issuing bonds to finance its business expansion.  The company contacts you, a business consultant charging $200 per hour, to answer the following questions. What are the advantages of issuing bonds over borrowing funds from a bank? What are the advantages of issuing bonds over issuing common stock? How is a bond price determined?   Required:  Provide answers to Western Entertainment’s questions worthy of your billing rate of $200 per hour.

How would you solve these using a financial calculator?   What values would you enter for N, I/YR, PV, PMT, and FV? *assume corporate bonds pay 2x annually and have a FV on $1000 *MACRS table attached a) Calculate the YTM of a 20-year corporate bond with a market price of $1,020, interest rate of 4.5% with 15 years left to maturity.  [YTM   b) What is the MACRS depreciation for a 5-year property asset purchased for $50,000 in the 2nd year?

Assume that you are choosing between 3 bonds that mature in 5 years and have a face value of $1,000. The first one pays annual coupon of $70. The second one pays $17 every three months, and the third one pays $5.5 every month. Assuming that all three bonds are selling at the same price in the market, which one would you buy? Bond 1 Bond 2 Bond 3 Blank

Suppose you own a convertible bond that has a conversion ratio equal to 62. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $16, and the bond is selling for $1,042. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $_______   . Converting the bond and selling the common stock would generate $_______   . Thus, it would be better to SELL THE BOND / CONVERT THE BOND INTO COMMON STOCK AND THEN SELL THE STOCK

Five years ago, you purchased a $1,000 par value corporate bond with an interest rate of 5 percent. Today, comparable bonds are paying 7 percent. What is the approximate dollar price for which you could sell your bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) D Approximate market value.