Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Ten
$7,000
bonds redeemable at par bearing
10%
coupons payable
quarterly
are sold
seven
years before maturity to yield
7.4%
compounded
annually.
What is the premium or discount and the purchase price of the bonds?
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- A $5,000,000 issue of ten-year bonds redeemable at par offers 6% coupons payable annually. What is the issue price of the bonds to yield 5.1% compounded quarterly? The issue price of the bond is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)arrow_forwardA bond pays dividends of $110 at the end of each year. If the bond matures in 20 years, what is the face value at an interest of 12% compounded annually. The bond value is 1,459.arrow_forwardA company issued bonds with a par value of $250,000 and a maturity of 25 years. The Bonds pay interest every six months based on a nominal interest rate of 8% per year. If on the date of issuance of the bonds the market rate (yield) is 10%: a. What will be the selling price of the bonds? b. If after 15 years the company retires the bonds, paying the amount of $225,000, how much will the gain or loss on debt retirement? Go back and assume that the market rate is 5.75%. a. What will be the selling price of the bonds? b. Make the journal entry to recognize interest expense in the third six-month period of the bonds. Assume that the bonds do NOT pay periodic interest. a. What will be the selling price of the bonds? b. Make the journal entry to recognize interest expense in the third year of the bonds.arrow_forward
- A $180000 issue of eleven year bonds redeemable at par offers 7.02% coupons payable semi annually. What is premium or discount and the purchase price of bonds to yield 5.6% compunded annually?arrow_forwardA $1,000 bond originally issued at par maturing in exactly ten years bears a coupon rate of 8% compounded annually and a market price of $1,147.20. The indenture agreement provides that the bond may be called after five years at $1,050. Which of the following statements is/are true? The yield to maturity is 6% The yield to call is 5.45% The bond is currently selling at a premium, indicating that market interest rates have fallen since the issue date The yield to maturity is less than the yield to call 1, 2, 3 1, 3 2, 3 4 only 1, 3, 4arrow_forwardA 25-year bond issue of 5,900,000 and bearing interest at 6.5% payable annually is sold to yield 6.65% compounded semi-annually. What is the issue price of the bonds? The purchase price of the bond is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)arrow_forward
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