Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 8, Problem 22QAP
Summary Introduction
To calculate: Clean price of the bond
Introduction: A
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You purchase a bond with an invoice price of $1,170. The bond has a coupon rate of 7.2
percent, and there are 2 months to the next semiannual coupon date. What is the clean
price of the bond? Assume a par value of $1,000.
You purchase a bond with an invoice price of $1,014. The bond has a coupon rate of 9 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond? Enter the answer with 2 decimals (e.g. 954.23).
A 10-year bond with a face value of $1,000 has a coupon rate of 9.0%, with semiannual payments.
a. What is the coupon payment for this bond?
b. Enter the cash flows for the bond on a timeline.
a. What is the coupon payment for this bond?
The coupon payment for this bond is $
every six months. (Round to the nearest cent.)
Chapter 8 Solutions
Corporate Finance
Ch. 8 - Prob. 1CQCh. 8 - Prob. 2CQCh. 8 - Prob. 3CQCh. 8 - Yield to Maturity Treasury bid and ask quotes are...Ch. 8 - Coupon Rate How does a bond issuer decide on the...Ch. 8 - Real and Nominal Returns Are there any...Ch. 8 - Prob. 7CQCh. 8 - Prob. 8CQCh. 8 - Term Structure What is the difference between the...Ch. 8 - Crossover Bonds Looking back at the crossover...
Ch. 8 - Municipal Bonds Why is it that municipal bonds are...Ch. 8 - Prob. 12CQCh. 8 - Treasury Market Take a look back at Figure 8.4....Ch. 8 - Prob. 14CQCh. 8 - Bonds as Equity The 100-year bonds we discussed in...Ch. 8 - Bond Prices versus Yields a. What is the...Ch. 8 - Interest Rate Risk All else being the same, which...Ch. 8 - Prob. 1QAPCh. 8 - Prob. 2QAPCh. 8 - Prob. 3QAPCh. 8 - Prob. 4QAPCh. 8 - Prob. 5QAPCh. 8 - Prob. 6QAPCh. 8 - Prob. 7QAPCh. 8 - Prob. 8QAPCh. 8 - Prob. 9QAPCh. 8 - Prob. 10QAPCh. 8 - Prob. 11QAPCh. 8 - Prob. 12QAPCh. 8 - Prob. 13QAPCh. 8 - Prob. 14QAPCh. 8 - Prob. 15QAPCh. 8 - Prob. 16QAPCh. 8 - Prob. 17QAPCh. 8 - Prob. 18QAPCh. 8 - Prob. 19QAPCh. 8 - Prob. 20QAPCh. 8 - Prob. 21QAPCh. 8 - Prob. 22QAPCh. 8 - Prob. 23QAPCh. 8 - Prob. 24QAPCh. 8 - Prob. 25QAPCh. 8 - Prob. 26QAPCh. 8 - Prob. 27QAPCh. 8 - Prob. 28QAPCh. 8 - Prob. 29QAPCh. 8 - Prob. 30QAPCh. 8 - Prob. 31QAPCh. 8 - Prob. 32QAPCh. 8 - Prob. 33QAPCh. 8 - Prob. 34QAPCh. 8 - Prob. 35QAPCh. 8 - Prob. 1MCCh. 8 - Prob. 3MCCh. 8 - Prob. 5MCCh. 8 - Prob. 6MCCh. 8 - Prob. 7MC
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- You purchase a bond with an invoice price of $1,041. The bond has a coupon rate of 5.63 percent, it makes semiannual payments, and there are 5 months to the next coupon payment. The par value is $1,000. What is the clean price of the bond?arrow_forwardConsider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.9%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ (Round to the nearest cent.)arrow_forwardA bond has the following features: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: 12 years What will the holder receive when the bond matures? Principal or All coupon payments? If the current rate of interest on comparable debt is 9 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Would you expect the firm to call this bond? Why? -Yes or No, since the bond is selling for a discount or premium? If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for twelve years if the funds earn 9 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. $arrow_forward
- A $1,000 par value bond with a fixed 10% rate of interest pays coupons semiannually. What amount will the bondholder receive on the bond’s maturity date?arrow_forwardYou intend to purchase a 2-year bond. The bond has a $1,500 face value and coupon payments are quarterly. Coupon rate of this bond is 18%. Market interest rate is 4 percent, what is the duration of the bond (in terms of quarters)? (Answer is rounded)arrow_forwardConsider a bond with a face value of $1,000. The coupon is paid semiannually and the market interest rate (effective annual interest rate) is 8 percent. How much would you pay for the bond if a. the coupon rate is 6 percent and the remaining time to maturity is 10 years?arrow_forward
- You purchase a bond with an invoice price of $1,130. The bond has a coupon rate of 4.6 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000. Multiple Choice $1,094 67 $1.079.33 $1,133.33 $1,114.77arrow_forwardA one-year premium bond with a face value of $10,000 has been purchased for $11,150. What is the yield to maturity? What is the yield on a discount basis?arrow_forwardYou purchase a bond with an invoice price of $1,034 and a par value of $1,000. The bond has a coupon rate of 8.4 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Clean pricearrow_forward
- You purchase a bond with an invoice price of $1,032. The bond has a coupon rate of 8.1 percent, and there are four months to the next semiannual coupon date. The bond has a par value of $1,000. What is the clean price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Clean price ( Prev 10 of 10 Nextarrow_forwardYou purchase a bond with a coupon rate of 6.9 percent and a clean price of $905. Assume a par value of $1,000. If the next semiannual coupon payment is due in two months, what is the invoice price?arrow_forwardHow to calculate the accrued interest for a 1000 par bond if the next coupon is payable in 74 days and there are 182 days in a semiannual coupon period? Assume the annual coupon rate is 3.1%arrow_forward
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