Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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1. Bert owns a bond that will pay him $75 each year in interest plus a $1,000 principal payment at maturity. What is the $1,000 called?
A. coupon
B. face value
C. discount
D. yield
E. dirty price
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- More time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? Alternatly, how would you solve this using MS Excel ? (please show formulas) *assume corporate bonds pay 2x annually and have a FV on $1000 a) What is the PV of a 25-year corporate bond issued 8 years ago paying 5.75% when similar bonds today pay a 4.75%? What is the current yield?arrow_forwardI. An investor purchases a bond worth Rp. 100 million, with a 15% interest tax on the bond. The investor is faced with two different cases. Case 1: Annual inflation = 0.5%, nominal interest rate = 3.17% / yearCase 2: Annual inflation = 2.96%, nominal interest rate = 5.63% / year a. In which cases do the investors receive the highest real returns? Explain. b. In which case did the investor pay the highest taxes? Explain. c. If you can choose, which is the best case for investors to buy bonds? Explain.arrow_forwardClick here to view the factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdfarrow_forward
- If you could buy a bond now and five years later sell it for $40,000, what would you be willing to buy it for, assuming an 8% discount rate and no other cash flows? O $27,223 O $58,773 $234,664 O None of the answers are correctarrow_forwardZilu owns a bond that will pay her $25 in interest each year plus a $1,000 principal payment at maturity. The $1,000 principal payment is called the Multiple Choice F.coupon. A. par value. b. discount. C.yield. D.call premium. E.None of the options are correct.arrow_forwardAn investor has $633,000 to invest in bonds. Bond A yields an average of 8% and the bond B yields 5%. The investor requires that at least 3 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. This can be set up as a linear programming problem. Introduce the decision variables: ?=dollars invested in bond A ?=dollars invested in bond B Compute ?+? $ ________. Round to the nearest cent.arrow_forward
- Mansukharrow_forwardAn 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: Answerarrow_forwardHi, I'm working on this corporate finance question from my textbook. How do I solve it using formulas or the financial calculator? A bond promises a risk-free payment of $1000 in one year. The risk-free rate of interest is2.64%. a) What is the price of the bond? b) If the price of the bond is actually $960, what is the arbitrage strategy? Illustrate all cash flowstoday and one year from today.arrow_forward
- Suppose that you own a 1-year bond with a 10% coupon rate, a yield of 2%, and a face value of $1,000. Suppose further that you took out a 1-year loan of $900 at 2% (you lucky devil, you!) to help start your new food truck business. Calculate your net worth (assets minus liabilities) if all interest rates rise from 2% to 3%. ___________arrow_forwardWhich of the following best shows the timeline for cash flows from a five-year bond with a face value of $1,000, a coupon rate of 5.9%, and semiannual payments? ..... О А. Рeriod 1 2 4 $59 $59 $59 59 $1,059 О В. Рeriod 1 2 9. 10 $59 $59 $59 $59 $1,059 О С. Рeriod 1 2 3 10 $29.5 $29.5 $29.5 $29.5 $29.5 O D. Period 1 2 3 10 $29.5 $29.5 $29.5 $29.5 $1,029.5arrow_forwardcan you please solve d-e. Plese DONT use excel.arrow_forward
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