Silvia is thinking about investing money into a bond to diversify her investments. Company X is 12 bonds at a face value of $43500 and a 17.5% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $43500. The bond is a year bond. As the bond was issued, the current nominal interest rate in the market is 7.0% compounded monthly. What is the maximum price Silvia should be pay for a single bond from
Q: You are considering investing in a bond that matures 20 years from now (the par value of the bond is…
A: Time Period = 20 Years Par Value = $1,000 Coupon Rate = 9.65% or Coupon Value = $96.5 Current Value…
Q: The ARA Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: Bond price is present value of coupon payment and maturity payment received during life of bond
Q: Linda wanted to invest in a bond issued by JoJo Ltd. The bond has $1,000 par value, matures in ten…
A: Bonds: Bonds are a debt instrument on which interest is paid. They can be issued at a discount/par…
Q: The Ara Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: Computation:
Q: The face value for WICB Limited bonds is $250,000 and has a 6% annual coupon. The 6% annual coupon…
A: The answer to this question can be calculated using bond calculator: FACE VALUE COUPON RATE MARKET…
Q: Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a…
A: Price of bond is equal to present value of coupon payment +Present value of par value.
Q: Zachary is considering buying a bond issued by CSD that pays coupon interest semi-annually, has 17…
A: Coupon rate = 6%/2 = 3% Coupon interest = Semi- annually Coupon payment (PMT) = $1000*3% = $30…
Q: You invest in a three year bond with a face value of $100, a yield of 4% pa and a fixed coupon rate…
A: In Bond Investor received a Fixed Income. Bond yield is the amount of return an investor realizes on…
Q: Marvel is an investor who wanted to purchase a bond. This bond has a maturity of 10 years, face…
A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…
Q: Aeri Lee is looking to invest in a two-year bond from Aegyo Productions Corporation. The company…
A: Yield to maturity (YTM) on a bond is the rate of return which investors expect if the bond is held…
Q: iv. Based on part (iii), if Hanna offers to buy Jason's bonds at RM100 for each unit, what will be…
A: The price of a bond: The price at which a bond is traded in the secondary market is the sum of the…
Q: Jimmy has a bond with a $1,000 face value and a coupon rate of 8.5% paid semiannually. It has a…
A: GIVEN, par = $1000 coupon rate = 8.5% m =2 ( semi annual) n = 5 r = 12%
Q: Your friend recommends that you invest in a three-year bond issued by Toyota, Inc., that will pay…
A: Given Information : Coupon rate = 10% Yield = 6% Face value (assume) = 1000
Q: The ARA Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: 1) Computation of amount to be paid for $1000 corporation bond is as follows: Amount to be paid for…
Q: Suppose your company needs to raise $15 million and you want to issue 6-year bonds for this purpose.…
A: Here, Note: As here nothing is given in the question regarding the par value of both the bond, we…
Q: John buys a 10-year bond with annual coupons. The par value of this bond is 10000 as is the…
A: IRR is the minimum return which is required by an investor to make a profitable investment.
Q: Jimmy has a bond with a $1,000 face value and a coupon rate of 9.5% paid semiannually. It has a…
A: Present Value is defined as the current value of the future stream of the funds or the cash flows,…
Q: Five years ago, the city of Baltimore sold at par a $1,000 bond with a coupon rate of 8 percent and…
A: The value of the bond depends upon the coupon rate of the bond and the return required by the…
Q: The Ara Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Silvia is thinking about investing money into a bond to diversify her investments. Company X issued…
A: The bond price is the fair assessment of the worth of a bond which is calculated by finding out the…
Q: Answer the following question and show all working using a financial calculator. DO NOT use excel:…
A: Current price of bond = Present value of interest +current price of maturity value
Q: Ms. Jones want to make 12% nominal interest compunded quarterly on a bond investment. She has an…
A: Bond price is present discounted value of future cash stream generated by bond. It is the sum total…
Q: If you want to receive $500 every three months for 10 years by investing in a bond that has a face…
A: The Bond's current price is the present value of its expected future cash flow, which is discounted…
Q: Kayla is considering an investment in either a bond or a financial instrument that has a return of…
A: Kayla has an option to either invest in bond or financial instruments that is providing a 0.5%…
Q: The face value for bonds is $250,000 and has a 6 % annual coupon. The 6 percent annual coupon bonds…
A: Bonds are issued when an organization wants to raise funds from investors. These bonds are generally…
Q: Sophia bought a bond when it was issued by Exxon Mobil Corporation 14 years ago. The bond, which has…
A: Bond is a debt instrument issued by companies and government. It is a fixed income instrument which…
Q: What is the value of the bond?
A: Bond valuation refers to a method which is used to compute the current value of future cash flow of…
Q: Five years ago you paid $10,000 for five, 10-year $2,000 bonds to help finance Engineer Paul's worm…
A: A bond is a financial debt security that is sold by governments or large business entities to borrow…
Q: I am thinking about buying a $100 heineken corporate bond. The bond was issued on Nov. 2005 with a…
A: Return on bond The realized return on a bond is calculated as shown below. Rate of return =Cash…
Q: You wish to sell a bond that has a face valueof $5,000. The bond bears an interest rate of…
A: First, calculate the coupon amount:
Q: Jenna bought a bond that was issued by Sherlock Watson Industries (SWI) three years ago. The bond…
A: Bonds are debt securities issued by Government or other companies, who seek to raise money from…
Q: An investor is considering the purchase of a(n) 8.125%, 15-year corporate bond that's being…
A: The price of a bond is the present value of future cash flows associated with the bond. This…
Q: You have been promoted to head of Treasury and Investment Management at Ecobank and have been handed…
A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…
Q: Mike is interested in purchasing a bond that matures in 15 years, pays a 9.0% coupon semiannually…
A: Assuming Face Value = 1000 Semi Annual Compounding, Time Period = 15 years * 2 = 30 semi annual…
Q: Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate…
A: Clifford Clark is a recent retiree Who is interested in investing some Of his savings in corporate…
Q: If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.7% coupon every year for the…
A: Real rate of return = (1+nominal rate)/(1+inflation rate)-1 Nominal rate of return of bond is the…
Q: Cardinal Mania is financing a new investment project by issuing five-year bonds. Each bond has the…
A: a. Calculate the yield to maturity as follows: Yield to maturity is 5.55%.
Q: The ARA Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Jimmy has a bond with a $1,000 face value and a coupon rate of 8.25% paid semiannually. It has a…
A: Bonds are issued to raise finance. The lender pays the bondholder the interest as well as the…
Q: Suppose your company needs to raise $10 million and you want to issue 30-year bonds for this…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments ata…
A: Yield to Maturity (YTM) is the internal rate of return required for the present value of future cash…
Q: Intal Corporation bonds have a coupon of 14%, pay interest semiannually, and mature in 7 years. Your…
A: Coupon rate = 14% Semi annually = 14/2 = 7% Since it is semi annually, return on investment = 10/2 =…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Silvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $27500 and a 14.0% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $27500. The bond is a 20 year bond. As the bond was issued, the current nominal interest rate in the market is 7.5% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X? Your Answer: AnswerHeather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 9 percent and the interest is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 9 years to maturity. Compute the price of the bonds based on semiannual analysis. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond priceHello,I need help with the following question.On March 1, 2011, someone purchased 60K bond for 17 years at face value. The company regularly pays the annual interest rate due on its bonds.On March 1, 2016, the market interest rate is 8% and the purchaser is considering selling the bond. What is the market value of the bonds on March 1, 2016?Thank you very much for your help,Michael
- A particular country's treasury issued a 35-year bond on October 15, 2014, paying 5.625% interest. Thus, if you bought $100,000 worth of these bonds you would receive $5,625 per year in interest for 35 years. An investor wishes to buy the rights to receive the interest on $100,000 worth of these bonds. The amount the investor is willing to pay is the present value of the interest payments, assuming a 6% rate of return. Assuming (incorrectly, but approximately) that the interest payments are made continuously, what will the investor pay? HINT [See Example 6.] (Round your answer to the nearest cent.)A few years ago, Zabar Technology issued an annual bond that has a face value equal to $1,000 and pays investors $40 interest semiannually. The bond has four years remaining until maturity. If an investor requires a 5% rate of return to invest in this bond, what is the maximum price he or she should be willing to pay to purchase the bond today? O $1,106.38 O $964.54 O $1,107.55 $935.37The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays interest semiannually at a 10% annual rate. What is the bond's price today if the interest rate on comparable new issues is 12%? What is the price today if the interest rate is 8%? Explain the results of parts a and b in terms of opportunities available to investors. What is the price today if the interest rate is 10%? Comment on the answer to part d.
- The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays interest semiannually at a 10% annual rate. What is the bond's price today if the interest rate on comparable new issues is 12%? What is the price today if the interest rate is 8%? Explain the results of parts a and b in terms of opportunities available to investors. What is the price today if the interest rate is 10%? Comment on the answer to part d. My teacher gave me this solution: SOLUTION: PB = PMT [PVFAk,n] + FV [PVFk,n] n = 20 ´ 2 = 40 k = 12/2 = 6 PMT = $1,000 ´ .10/2 = $50 FV = $1,000 PB = $50 [PVFA6,40] + $1,000 [PVF6,40] = $50 (15.046 3) + $1,000 (.0972) = $849.52 Bartleby gave me this answer earlier tonight: particulars periods cash flows ($) PVF @ 6% Present Value ($) coupon payments ($1,000 X 5%) 1 to 50 50.00 15.469974 773.4987164 payment on redemption 50 1000 0.053283 53.283021178 Present…Consider buying a $1,000-denomination corporate bond at the market price of $996.25. The interest will be paid semiannually at an interest rate per payment period of 4.8125%. Twenty interest payments over 10 years are required. We show the resulting cash flow to the investor as shown. Find the return on this bond investment (or yield to maturity).The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays interest semiannually at a 10% annual rate. What is the bond's price today if the interest rate on comparable new issues is 12%? What is the price today if the interest rate is 8%? Explain the results of parts a and b in terms of opportunities available to investors. What is the price today if the interest rate is 10%? Comment on the answer to part d. The first three subparts have been answered. Please answer #4 and #5. Should be pretty simple, but I just want to make sure I understand the material.
- Susan bought a 18-year bond when it was issued by Octodan Corporation 2 years ago (NOTE: the bond was issued 2 years ago. In calculating price today, remember it has only 16 years remaining to maturity). The bond has a $1,000 face value, an annual coupon rate equal to 8 percent and the coupons are paid every six months. If the yield on similar-risk investments is 10 percent, What do you observe regarding the relationship between interest rate (YTM) bond’s price? What do you observe regarding the relationship between coupon, YTM and the bond’s price?A company issued a bond a few years ago that has a face value equal to $1,000 and pays investors $30 interest every six months. The bond has eight years remaining until maturity. If you require a 7 percent rate of return to invest in this bond, what is the maximum price you should be willing to pay to purchase the bond? * $965.63 $1,062.81 $939.53 $940.29 O $761.15Seven years ago Barbour Bakeries issued 20-year bonds to fund a portion of its capital investments. Today it will cost $1,101 to purchase one of these 6.0% coupon (paid semiannually), $1,000 face value bonds. If you invest in a Barbour bond, what yield do you expect to earn on your investment?