Carlos owns investment A and 1 bond B. The total value of his holdings is $2,496.36. Investment A is expected to pay annual cashflows to Ronish of $291.00 per year with the first annual cash flow expected later today and the last annual cash flow expected in 8years from today. Investment A has an expected return of 15.55 percent. Bond B pays semi-annual coupons, matures in 13 years, hasa face value of $1,000.00, has a coupon rate of 8.52 percent, and pays its next coupon in 6 months. What is the yield-to-maturity forbond B?4.78% (plus or minus 2 bps)3.47% (plus or minus 2 bps)9.57% (plus or minus 2 bps)5.32% (plus or minus 2 bps)none of the answers are within 2 bps of the correct answer

Price of bond is the present value of coupon payments plus present value of the par value of the…

los owns investment A and 1 bond B. The total value of his holdings is $2,496.36. Investment A is expected to pay annual cash flows to Ronish of $291.00 per year with the first annual cash flow expected later today and the last annual cash flow expected in years from today. Investment A has an expected return 15.55 percent. Bond B pays semi-annual coupons, matures in 13 years a face value of $1,000.00, has a coupon rate of 8.52 percent, and pays its next coupon in 6 months. What is the yield-to-maturity f bond B? O 4.78% (plus or minus 2 bps) O 3.47% (plus or minus 2 bps) O 9.57% (plus or minus 2 bps) O 5.32% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer

los owns investment A and 1 bond B. The total value of his holdings is $2,496.36. Investment A is expected to pay annual cash flows to Ronish of $291.00 per year with the first annual cash flow expected later today and the last annual cash flow expected in years from today. Investment A has an expected return 15.55 percent. Bond B pays semi-annual coupons, matures in 13 years a face value of $1,000.00, has a coupon rate of 8.52 percent, and pays its next coupon in 6 months. What is the yield-to-maturity f bond B? O 4.78% (plus or minus 2 bps) O 3.47% (plus or minus 2 bps) O 9.57% (plus or minus 2 bps) O 5.32% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Joseph owns investment A and 1 bond B. The total value of his holdings is $2,770.00. Bond B has a coupon rate of 8.08 percent, par value of $1,000.00, YTM of 7.39 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Joseph of X per year forever with the first annual cash flow expected in 1 year from today. The expected return for investment A is 7.60 percent. What is X, the fixed annual cash flow that will be paid forever by investment A? O $128.03 (plus or minus $1) O $154.34 (plus or minus $1) O $129.99 (plus or minus $1) O $156.27 (plus or minus $1) O none of the answers are within $1 of the correct answer
Mathias purchases a 7-year CD for $5000 with 1.1% APR compounded monthly, and a 7-year bond for $5000 with a 4.3% coupon rate, paid annually. How much will Mathias’s original $10000 investment be worth at the end of the 7 years? Round your answer to the nearest cent.$_____________________
Shannon purchases a bound for $952.00. The bond matures in 3 years, and Shannon will redeem it at its face value of $1,000. Coupon payments are paid annually. If Shannon will earn a yield of 12% year compounded yearly, what is the coupon rate on the investment?
Mr. Estrada purchased 100 5% bonds from Lontok Finance Corporation. Each bond has a face value of P 3,000 and were purchased at P 2,500. The bonds mature in 10 years. a. How much will Mr. Estrada receive as his dividend for all the bonds if dividends are paid semi-annually? b. Compute for its maturity value. The maturity valuei c. After the maturity date, how much is the total earnings of Mr. Estrada?
3) Don makes a one time investment in the following way: he purchases a 30 year, $5, 000 face value bond with semiannual coupons, and with a semianmual 4% coupon rate and a semianmual 6% yield rate. Immediately after receiving his coupons, he invests his coupons into an account earning a nominal semiannual interest rate of i) = 3%. Find how much is in the account after 30 years and find Don's nominal annual yield rate over the 30 year period.
Stacy purchases a $60,000 bond for $57,500. The coupon rate is 6% per year payable quarterly. The bond has a 15 year life, at which time it is cased in for face value. The bank's interest is 4.8% per year compounded monthly. Stacy decides to sell the bond at the end of 8 years. What is the bond value at this time? work in terms of excel
An investor borrows an amount at an annual effective interest rate of 7% and will repay all interest and principal in a lump sum at the end of 10 years.She uses the amount borrowed to purchase a 1000 par value 10-year bond with 10% semiannual coupons bought to yield 8% convertible semiannually.All coupon payments are rein-vested at a nominal rate of 6% convertible semiannually. Calculate the net gain to the investor at the end of 10 years after the loan is repaid.
Bob uses 19481 to purchase a 10-year par-value bond (i.e. redeems at face-value). Coupons are paid out annually (end of the year) and each coupon is equal to 2% of the face-value of the bond. If each coupon payment is invested into an account that earns an effective annual interest rate of 2.4%, then what is the face-value of the bond if Bob realizes an overall yield of 3.36% per year effective over the 10 year period? Give your answer rounded to the nearest whole number (i.e. X).
Mark Motel's debt has a face value of $40 million, a coupon rate of 14% (paid semiannually), and expires in 12 years (at t = 12 . The current annual yield-to-maturity (stated) for all bonds of the company is 15%. Mark wishes to conserve cash for the next few years. To do this, Mark decides to issue new equity and use the proceeds to purchase the existing debt at the market price. The current stock price of Mark is $60 and there are 2 million shares outstanding. 1. How many shares should Mark issue to purchase the existing debt? Assume the decision to purchase the bond does not change the stock price. Instead, the company decides to issue a zero-coupon bond that matures at year 5, and use the proceeds to purchase the existing debt at the market price. 2. What is the face value of the zero-coupon bond that Mark needs to issue?
Bill buys a 10-year 1000 par value 5% bond with semi-annual coupons. The price assumes a nominal yield of 6%, compounded semi-annually. As Bill receives each coupon payment, he immediately puts the money into an account earning interest at an annual effective rate of i. At the end of 10 years, after the final coupon, redemption value and accumulated value in the extra account shows that Bill has earned at an annual rate of 6.5%. Calculate i.
In 2014 Ray purchased a 10-year, 3.80% p.a. semi-annual paying coupon bond with a Face Value (FV) of $1 000 000, as she was attracted by the fixed income stream in order to fund her retirement expenses. a) What is the price of this bond in 2019 (5 years remaining) at a current market interest rate of 1.60% p.a.? Show formula, variables, calculation and a concluding statement in your response. b) Describe the relationship between bond prices and interest rates. c) Ray decided to sell the bond from part a) and will invest the proceeds by buying blue chip shares. Explain whether this is wise by Ray by discussing the advantages and disadvantages of shares.
Stacy purchases a $60,000 bond for $57,500. The coupon rate is 6% per year payable quarterly. The bond has a life of 15 years, at which time it can be cashed in for face value. If the bank's interest is 4.8% per year compounded monthly, what is the present worth of the bond?

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