. 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 real ized rate of return earned on this bond. 2. 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
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1. 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 real ized
2. 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? (LG 3-1)
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- 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?hi, this is my hw question. You bought a bond five years ago for $880 per bond. The bond is now selling for $920. It also paid $60 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bondSuppose you are deciding whether to buy a particular bond. If you buy the bond and hold it for 9 years , then at that time you will receive a payment of $8,981. If the interest rate is 4 percent, then the present value is....
- Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $100 in 2020 at the then current interest rate of .22 percent year, how much would the bond be worth in 2028? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2028, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2038. What annual rate of return will you earn over the last 10 years?6) You buy a 5-year bond that pays a $4 coupon each year for five years (first coupon paid the end of year 1). At the end of 5 years, you receive back your principle of $100 (in addition to the final coupon payment of $4). Immediately after you purchase the bond, interest rates move to 7%. What is the present value of the cash flows you will receive? Now say rates moved to 2%, what is the present value of the cash flows you receive?Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 24 years. Assume you purchase a bond that costs $25. a. What is the exact rate of return you would earn if you held the bond for 24 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $25 in 2020 at the then current interest rate of .15 percent year, how much would the bond be worth in 2031? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2031, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2044. What annual rate of return will you earn over the last 13 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Rate of return b. Bond value c. Rate…
- You are considering purchasing a bond. The bond will pay you $100 at the end of each year for three years. At the end of the third year, the bond will also pay you back its $1,000 face value. Assuming a 10% discount rate, how much is this bond worth today? Round to the nearest dollar. I am having trouble calculating how much this bond is worth today. Thank you!Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 24 years. Assume you purchase a bond that costs $25. a. What is the exact rate of return you would earn if you held the bond for 24 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $25 in 2020 at the then current interest rate of 15 percent year, how much would the bond be worth in 2031? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2031, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2044. What annual rate of return will you earn over the last 13 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)You will receive $100 from a savings bond in 3 years. The nominal interest rate is 8%. a. What is the present value of the proceeds from the bond? b. If the inflation rate over the next few years is expected to be 3%, what will the real value of the $100 payoff be in terms of today's dollars? C. What is the real interest rate? d. Show that the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)] gives the same present value for the bond as you found in part (a).
- Suppose that someone owns a 30 year $24,000 T-bond with a rate of 4%. After 6 years the bond is sold for cash, but the interest rates have fallen to 2.5%. (a)How much has the bond paid in total for the first 6 years? (b)How much will the bond pay the person buying it over the next 24 years? (c)How much is the bond currently worth?Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is sold for cash, but the interest rates have risen to 8.5%. (a)How much has the bond paid in total for the first five years? (b)How much will the bond pay the person buying it over the next 25 years? (c)How much is the bond currently worth?You bought a bond five years ago for $903 per bond. The bond is now selling for $930. It also paid $65 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. (Do not round intermediate calculations. Round. your percentage answer to 2 decimal places. (e.g., 32.16)) Realized rate of retur