INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
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Chapter 14, Problem 15PS
Summary Introduction
To calculate:
The invoice price of a coupon bond paying semiannual coupons.
Introduction:
Bonds are debt securities. These promise to provide the holder with a fixed income or an income which is calculated as per a formula. Fixed income securities is another term used for debt securities. Bonds are securities which are provided in connection with borrowing arrangement. Over a certain period of time, the issuer is obliged to make specific payments to the holder in this type of securities. Coupon bonds are debt obligations where the semi-annual interest payments are made. In the time between issuing of the bond and the maturity of the bond, the bond holders get coupon payments.
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A bond with a 7% coupon rate makes payments on January 15 and July 15 of each year
(182-day coupon period). On January 30, the ask price for the bond was reported as
100:02. On April 15, it was selling at an ask price of 101:04. What is the bond's invoice
price on January 30? If you purchased the bond from a dealer on April 15, what price
would you have to pay for it? (Note: Bond quotes are always at a percentage of the face
value. Therefore, 103:05 must be read as 103.05% of face value, so the quoted price is
$1,030.5.)
A government bond with a coupon rate of 5% makes semiannual coupon payments on January 12 and July 12 of each year. The Wall Street Journal reports the asked price for the bond on January 27 at $1,004.375. What is the invoice price of the bond? The coupon period has 182 days. (Round your answer to 2 decimal places.)
A bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of eachyear. The Wall Street Journal reports the asked price for the bond on January 30 at 100:02. What is theinvoice price of the bond? The coupon period has 182 days.
Chapter 14 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
Ch. 14 - Prob. 1PSCh. 14 - Prob. 2PSCh. 14 - Prob. 3PSCh. 14 - Prob. 4PSCh. 14 - Prob. 5PSCh. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Prob. 9PSCh. 14 - Prob. 10PS
Ch. 14 - Prob. 11PSCh. 14 - Prob. 12PSCh. 14 - Prob. 13PSCh. 14 - Prob. 14PSCh. 14 - Prob. 15PSCh. 14 - Prob. 16PSCh. 14 - Prob. 17PSCh. 14 - Prob. 18PSCh. 14 - Prob. 19PSCh. 14 - Prob. 20PSCh. 14 - Prob. 21PSCh. 14 - Prob. 22PSCh. 14 - Prob. 23PSCh. 14 - Prob. 24PSCh. 14 - Prob. 25PSCh. 14 - Prob. 26PSCh. 14 - Prob. 27PSCh. 14 - Prob. 28PSCh. 14 - Prob. 29PSCh. 14 - Prob. 30PSCh. 14 - Prob. 31PSCh. 14 - Prob. 1CPCh. 14 - Prob. 2CPCh. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - Prob. 5CP
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