Foundations Of Finance
Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 7, Problem 11SP

a.

Summary Introduction

To determine: The value of bond.

b.

Summary Introduction

To determine: The value of bond if the required rate of return increases to 7% and decreases to 2%.

c.

Summary Introduction

To discuss: The implications from the result from Part B.

d.

Summary Introduction

To determine: The value of bond if the bond matures in 10 years.

e.

Summary Introduction

To discuss: The implications from the result from Part D.

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Please use finance calculator  An issue of bonds with par of $1,000 matures in 8 years and pays 9% p.a. interestsemi-annually. The market price of the bonds is $955 and your required rate of returnis 8%.(a) Calculate the bonds expected rate of return.(b) Calculate the value of the bond to you, given your required rate of return.(c) Should you purchase the bond? (State the reason for your decision.)
A.) You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid $75 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. B.)  Refer again to the bond information in Problem 1. You expect to hold the bond for three more years, then sell it for $990. If the bond is expected to continue paying $75 per year over the next three years, what is the expected rate of return on the bond during this period?
Please answer question with details on how to do it. Thank you.

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Foundations Of Finance

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What happens to my bond when interest rates rise?; Author: The Financial Pipeline;https://www.youtube.com/watch?v=6uaXlI4CLOs;License: Standard Youtube License