Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Round
all dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percent
rounded to one decimal place
28. This morning, Mary bought a ten-year, $1000 par value bond with an 8.25% coupon rate and semi-annual
payments. She paid $1082.62 for the bond. If the market interest rate on this type of bond decreases to 6.98%
tonight, how much will Mary receive for her first coupon payment?
29. Bluestar Air plans to issue a $1000 par value, 16-year, semi-annual payment bond with an annual coupon rate
of 8.60%. If the bond’s yield to maturity is 7.40%, what will Bluestar Air’s bond sell for?
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- Detailed steps please conceptarrow_forwardanswer both components PLEASE!arrow_forwardJimmy has a bond with a $1,000 face value and a coupon rate of 8.25% paid semiannually. It has a five-year life. If investors are willing to accept a 12 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? Show your work. What is the impact of paying interest semi-annually rather than annually? Explain.arrow_forward
- You want to receive $5,000 per month in retirement. If you can earn 0.8% return per month and you expect to need the income for 28 years, how much do you need to have in your account at retirement? $582,032 $589,511 $596,123 $575,298 A firm has issued a bond. The bond has a 6% coupon, paid semiannually, a current maturity of 15 years, and sell for $1,273.8. The firm’s marginal tax rate is 21%. What’s the firm’s after-tax component cost of debt? 3.62% 2.86% 6.00% 12%arrow_forwardshow the step by step solutions and what required it isarrow_forwardLydia just purchased a Treasury bond for $108.723 at a yield rate of j2=7.68% p.a. The duration of Lydia's bond is 9.4099 years. Using the bond price sensitivity formula, calculate the change in price of Lydia's bond that would result from an increase in the yield rate (j2) of 46 basis points. Round your answer to four decimal places. (The values below are all in dollars.) a.-2.2661 b.-4.5321 c.-4.3705 d.-2.1852arrow_forward
- Bill Mitselfik wants to buy a bond. It has a face value of $50,000, a bond rate of 6% (nominal), payable semi- annually, and matures in 10 years. Bill wants to earn a nominal interest of 8%. How much should Bill pay for the bond?arrow_forward11. Jared wants to invest money in a 6% savings account that compounds semiannually. Jared would like the account to have a balance of $110,000 2-years from now. How much must Jared deposit to accomplish his goal? 12. Pathfinder issues a bond with a coupon rate of 9%, face amount of $50,000, and is due in 5 years. Interest payments are made semi-annually. The effective rate for this type of bond is 10%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)arrow_forwardA bond costs $925, with a face value of $1000 and pays 4% of the face value each year. If the bond will be paid off at the end of 10 years and your MARR is 5%, should you buy the bond? Please solve using NPV method if possible, and please do without excel or calculators since I'm trying yo understand the topic . Thank you!arrow_forward
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