Which will you prefer to invest your $1,500: a) a two year bond with interest rate of 9 percent or b) two one year bonds, Year 1, the bond will earn 8% and year 2 the second bond will earn 9%. Which bond will you buy?
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A: The Stated semiannual interest payment $40 Rate of interest = 5% 20 years * 2 = 40 payments Present…
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A: Future value (FV) = $ 7000 Period (t) = 10 Years Annual interest rate (r) = 6%
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A: The rate of return on the bond is calculated as sum of coupon yield and the capital gain yield
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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
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A: Value of a bond refers to the right price of the bonds. The right price or intrinsic value helps in…
Q: I already ask this but I whant know how you do the calculation, please could you show me all the…
A: Calculating the price of bond if interest rate on the bond is 6%. We have,Price of bond = C [1- (1 /…
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A: Present value (PV) is the current value of a future sum of money or stream of cash flows given a…
Q: The saleemi corporation’s is $1,000 bonds pay 9 percent interest rate annually and have 9 years…
A: Yield to maturity Yield to maturity refers to the total rate of return anticipated on a bond if held…
Q: The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 14 years until…
A: Annual coupon interest payments = 6% of 1000 = 60 14 such coupons will be paid.
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A: Bond is a debt security that is issued by organizations to raise debt funds from investors in…
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A: Modified duration of a bond shows the change in the value of the security as the value of the…
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Q: Which of the following investments do you prefer? (a) Purchase a bond with a single payment of $1000…
A: The question gives the following information:
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Q: Suppose Roberto is considering a 12-year bond with a face value of $2,000 and a rate of 8% payable…
A: Face value = $ 2,000 Coupon rate = 8% Semi annual coupon amount = 2000*0.08/2 = $ 80 Years to…
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Q: The Saleemi Corporation's $1,000bonds pay 5 percent interest annually and have 13 years until…
A: A. Yield to maturity = [Interest +(Maturity value - Purchase Price)/number of years of…
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A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: Please respond to the following: You have just won the Strayer Lottery jackpot of $11,000,000. You…
A: Since more than one question is posted. It is allowed to solve one question at a time. Please…
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Q: You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months.…
A: The price of the bond shall be the present value of face value of the bond and semi annual coupons…
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A: Corporate bond-It is a bond issued by a company to fund its business operations, major expansions,…
Q: An issue of bonds with par of $1,000 matures in 8 years and pays 9% p.a. interest semi-annually. The…
A: given, FV = $1000 N = 8 COUPON RATE=9% MARKET VALUE = $955 REQUIRED RETURN = 8% SEMI ANNUAL BOND
Q: The Saleemi Corporation's $1000 bonds pay 7 percent interest annually and have 14 years until…
A: Given, Face Value = $1000 Coupon rate = 7% Coupon payment = $1000*7% = $70 Current Price = $1095…
Q: Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is…
A: a) Hence, the first 5 years the bond has paid $4200.
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A: Yield to maturity Years 10 coupon amount (PMT) 95 Face value (FV) 1000 Yield rate 9.50%
Q: A bond with a face value of $1000 can be purchased for $800. The bond will mature 5 years from now,…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
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Q: A bond pays $50,000 per year and has a face value of $500,000 at the end of 8 years when it has to…
A: Annual payment = $ 500 Face value = $ 500,000 Period = 8 Years Current price = $ 390,000
Q: A bond promises to pay you $7,000.00 in 10 years. If you are able to earn 6 percent on securities of…
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rate…
Q: a. Assuming you purchased the bond for $350 what rate of return would you earn if you held the bond…
A: given data bond purchased price = $350 no of years = 25 maturity value = $1000 a) finding rate of…
Q: We are planning to purchase a 6% bond with a face value of $1000 that pays interest semi-annually.…
A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: Assume that you have two bond investments and the information follows: Bond A has a par value of…
A: Assumption: The bond yield is assumed as 10%.
Q: What would you pay for a $65,000 debenture bond that matures in 10 years and pays $9,100 a year in…
A: A bond is an instrument that represents the loan that is made by the investor to the company and…
Q: The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 14 years until…
A: Par value (FV) = $ 1000 Coupon rate = 6% Coupon amount (C) = 1000*0.06 = $ 60 Years to maturity = 14…
Q: An issue of bonds with par of $1000 matures in 12 years and pays interest at 7% annually. The…
A: Required: The bond's expected rate of return. Should the investor purchase the bond?
Q: You spend $725.00 to purchase a $1,000 bond that will have no coupon payments and matures in 12…
A: For the calculation of interest rate our formula will be as follows: Interest rate = (Maturity…
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- According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three-year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: Oa. 6.0% O b. 15.0% Oc. 5.0% O d. 4.0%Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4 percent, the future value of the bond (the amount the bond pays in one year) is? a. P1,560.00 b. P1,540.00 c. P1,440.00 d. 1,442.31Which bond should an investor choose when bond A guarantees 12% interest after 2 years while bond B gives 8% interest per year? Group of answer choices a. Bond A b.Bond B c. Either A or B d. Neither A or B
- According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three- year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: O a. 5.0% O b. 15.0% O c. 4.0% O d. 6.0%Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4 percent, the future value of the bond (the amount the bond pays in one year) is * P1,560.00 P1,540.00 P1,440.00 O P1,442.31Suppose that you are interested in purchasing a bond issued by the VPI Corporation. The bond is quoted in the Wall Street Journal as selling for 89.665. How much will you pay for the bond if you purchase it at the quoted price? Assuming you hold the bond until maturity, how much will you receive at that time? If you purchase the bond at the quoted price, you would pay $. (Round to the nearest cent) Assuming you hold the bond until maturity, you would receive $ (Round to the nearest dollar)
- You consider purchasing bonds today. There are three future time periods, t = 1, 2, 3, wherebonds can have payoffs. Consider the following 4 bonds: a) One amortizing bond paying $40 each period trading at a price of $104.95.b) One amortizing bond paying less in early periods and more in later periods. The bond pays $40 inperiod 1, $30 in period 2, and $20 in period 3. This bond is trading at a price of $80.61.c) One coupon bond with a 11% coupon rate trading at a price of $96.08.d) One zero coupon, which currently trades at a price of $77.22. Suppose you can take long or short positions in any bond, and also lend or borrow money. Is it possibleto construct an arbitrage trade where you pay nothing upfront, and get a certain payoff in period 1? If so,describe how you would do this trade.You have purchased a U.S. Treasury bond for $3,150.00. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5,150. What interest rate will you earn on this bond? Group of answer choices 6.18% 5.04% 3.73% 5.67% 4.46%Suppose the current interest rate on a one-year bond is 2% and the current interest rate on a two-year bond is 4%. The term premium on a two-year bond is 1%. According to the expectations hypothesis, what interest rate should we expect on a one-year bond next year? Answer as a percentage to one decimal place and do not include symbols (e.g. $, %, commas) in your answer. Answer:
- a. Assuming you purchased the bond for $350 what rate of return would you earn if you held the bond for 25 years until it matured with a value $1000? a. Rate of return____% b. Suppose under the terms of thebond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until the date. How much would the bond be worth at that time? b. Bond value_____ c. In 2024 instead of cashing in the bond for its then current value you decide to hold the bond until it mature in 2043. What annual rate of return will you earn over the last 19 years? c. Rate of return___%I already ask this but I whant know how you do the calculation, please could you show me all the step and the calculation. A $1,000 bond has 7.5 percent, what should be the price of the bond. If a current interest rate are 10 percent, what should be the price of the bond? b. If after 6 years interest rate are still 10 percent, what should be the price of the bond? e. Chnage the interest rate in A and B to 6 percent and rework . even though the interest rate is 6 percent in both calculation, why are the bond prices different?Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Show Transcribed Text B) How could you construct a 1-year forward loan beginning in year 3? (Face Value) C) How could you construct a 1-year forward loan beginning in year 4? (Face Value) Required A Required B Complete this question by entering your answers in the tabs below. Face value Rate of synthetic loan → Show Transcribed Text Price $ 970.93 898.39 836.92 How could you construct a 1-year forward loan beginning in year 3? Note: Round your Rate of synthetic loan answer to 2 decimal places. Required A 776.20 685.42 Required B Face value Rate of synthetic loan Required C 7.85 % Required C How could you construct a 1-year forward loan beginning in year 4? Note: Round your Rate of synthetic loan answer to 2 decimal places. Ċ 13.29 %
