8. A bond with a par value of 30,000 is priced at 108.40 of par and has 10 years remaining untilmaturity. The bond has an 8% coupon rate, paid semi-annually. What is the amount of nextcoupon payment?A. 600B. 1200C. 2400D. 3252E. None of above9. ABC common stock is expected to have extraordinary growth in earnings and dividends of25% per year for year 2 and 3, after which the growth rate will settle into a constant 5%. Ifthe required return by investors is 13% and next year's dividend is 4. What should be theapproximate current share price?A. 60.58B. 65.10C. 68.64D. 73.56E. None of above10. An investor receives a 15% total return by purchasing a stock for 40 and selling it after oneyear with a 5% capital gain. What is the selling price after one year?.A. 40B. 42C. 44D. 46E. None of above11. A stock has the following information. What is the stock price?● Required rate of return: 14%● ROE: 15%● Plowed back ratio: 40%Expected dividend: 1●A. 12.5B. 13.5C. 14.5D. 15.5E. None of above5

As per Bartleby honor code guidelines, when multiple questions are asked, the exper is required to…

8. A bond with a par value of 30,000 is priced at 108.40 of par and has 10 years remaining until maturity. The bond has an 8% coupon rate, paid semi-annually. What is the amount of next coupon payment? A. 600 B. 1200 C. 2400 D. 3252 E. None of above

8. A bond with a par value of 30,000 is priced at 108.40 of par and has 10 years remaining until maturity. The bond has an 8% coupon rate, paid semi-annually. What is the amount of next coupon payment? A. 600 B. 1200 C. 2400 D. 3252 E. None of above

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

See similar textbooks

Related questions

Q: mes and Tanisha are saving for their daughter Nalah's college education. Nalah just turned 10 (at t…

A: The PV analysis is conducted to find the profitability of a project. It allows an investor to make…

Q: You are managing a portfolio of $1.0 million. Your target duration is 19 years, and you can choose…

A: zero coupon bond refers to the security instrument for the debt without any payment of interest on…

Q: the value of the S&P 500 stock index is currently $3,700. Required: If the 1-year T-bill…

A: Futures are based on the expected rate in the future and that is based on risk free rate and…

Q: Solomon Company has an opportunity to purchase a forklift to use in its heavy equipment rental…

A: The payback period is a basic financial metric used to evaluate the time it takes for an investment…

Q: You've collected the following information from your favorite financial website. 52-Week Price Lo…

A: The dividend paid (D0) is 2.30.The growth rate for the next five years is 20.5%.The growth rate…

Q: After an unseasonably hot summer, Willow received a call from her tenant that the AC was no longer…

A: The objective of the question is to determine the date on which the HVAC unit would be considered…

Q: Indicate the Beneisch M-Score and the Piotroski F-Score for TESLA and explain their significance.

A: Beneisch M-Score- Beneisch model is a tool that is used to uncover financial fraud. It uses…

Q: ars that is expected to cost $13 million now and another $10 million 1 year from now. If total…

A: NPV is net present value and is the financial break even point and net present value should be zero…

Q: In order to reduce inflation, the Federal reserve may choose to sell Treasury bonds in open market…

A: In this question, we are required to determine whether Federal Reserve sells Treasury Bonds in open…

Q: Vickie just bought a 6.5% annual coupon bond that will mature in 15 years for $960. Assume the par…

A: Here, ParticularsValuesFace value of the bond (FV) $ 1,000.00Current price of the bond (PV) $…

Q: Additional Information: i. The Long-Term debt consists of 8% annual coupon bonds, with 15 years to…

Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,000 of this amount as a down payment and…

A: We need to use NPER function in excel to calculate time to payoff loan. The formula…

Q: Suppose you are thinking about purchasing a house for $1,400,000. The 30-year fixed-rate mortgage…

A: Here,ParticularsValuesPurchase amount $ 14,00,000.00Down payment (%)25.00%Number of years…

Q: a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c.…

A: Determining the Maturity of the bond (in years):The maturity of the bond is the number of periods…

Q: lignin is a basic component of almost any plant that grows, so it is one of the most abundant…

A: Present worth is the equivalent value of cash flow from the project based on time value of money and…

Q: You own a lot in Key West, Florida, that is currently unused. The going price for similar lots is…

A: The objective of the question is to calculate the price of an option to buy a piece of land in Key…

Q: Donnie and Marie own a condo in Key West, Florida. The condo is also the couple’s primary…

A: When reporting income and expenses from renting out a property on platforms like Airbnb, it's…

Q: Maria has a portfolio consisting of 7 shares of stock A (purchased for $70 per share) and 4 shares…

A: Variance and standard deviations are the measure of risk. If the value for each is higher then it…

Q: Required information [The following information applies to the questions displayed below.) On…

A: Cash Payment of Interest = Face Value * Stated rate of InterestInterest Revenue = Carrying Value *…

Q: Project A requires an initial outlay at t = 0 of $3,000, and its cash flows are the same in Years 1…

A: MIRR is the modified internal rate of return which can calculated by using excel MIRR function.

Q: Consider a 3-year installment loan. The APR is 11%. Monthly loan payments are $780. In the 13th…

A: Monthly payments for the loan carry the payment for interest and also payment for principal loan…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: The stock value is the value of the benefits provided by the stock. The benefits include the…

Q: If average daily remittances are $1 million, and extended disbursement float adds 12 days to the…

A: Daily cash flow= $1 million= $1,000,000Reduction in time= 12 daysInterest rate= 15%Required:How much…

Q: Assume that you manage a $10.00 million mutual fund that has a beta of 1.25 and a 9.50% required…

A: Old portfolio valueNew portfolio valueInvestment…

Q: You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one…

A: Bond face value = $10001 year spot rate = 6%11-year spot rate = 8%

Q: A machine that produces a certain piece must be turned off by the operator after each piece is…

A: Present SystemWith BrakeSaving in HoursTime to produce one unit in seconds105105Coasting time in…

Q: What is the bond's price? Multiple Choice $907.89 $1.198.24 $1.050.72 $1.101.45 $1.083.09

A: A bond's price is determined by the bond's future cash flows, which include periodic interest…

Q: lan and Sara Winthrop are a married couple who file a joint income tax return. They have two…

A: Marginal tax is tax on the additional income earned above the base income and is tax rate of extra…

Q: What are the average return and standard deviation of your portfolio AB? Average return is Round…

A: Portfolio is a pool of various stocks with various risk and return patterns. All the stocks with…

Q: You need $58000 on March 15, 2024. How much do you need to deposit each quarter in an account…

A: Future value refers to the worth or value of cash flows. Cash flows are compounded at the rate of…

Q: Calculate the rate of change in bond price Bond Coupon Rate Maturity YTM=6% YTM=7%…

A: The term "present value of future cash flows" refers to the present value of a bond's future…

Q: find the variance on this 3 stock portfolio.

A: Portfolio variance is a measure used in finance to quantify the dispersion of the returns of a…

Q: Your highly successful software company is considering adding a new software title to your list. If…

A: Opportunity cost refers to the loss of profit while missing the next best alternative which is to be…

Q: Database Systems is considering expansion into a new product line. Assets to support expansion will…

A: The net income is the amount left over after deducting costs, allowances and taxes.The return on…

Q: You want to borrow $59,000 from your local bank to buy a new sailboat. You can afford to make…

A: APR is Annual Percentage rateis the rate or return at which given amount is borrowed or lent to the…

Q: Every two weeks, Betty makes a $210 payment toward a car loan whose annual rate is 4.8%. If she will…

A: Variables in the question:PMT=$210Annual rate=4.8%N=5 yearsAs payment is made every two weeks, no.…

Q: At the end of January, Higgins Data Systems had an inventory of 710 units, which cost $15 per unit…

A: LIFOLIFO stands for last in, first out. LIFO is an inventory accounting method where it is assumed…

Q: Pujols Lumber Yard has a current accounts receivable balance of $590,150. Credit sales for the year…

A: In this question, we are required to determine the Days Sales Outstanding (DSO).

Q: maintain the convey or system the first year is $20,000; this cost increases by 5% per year. What is…

A: The optimal replacement interval and minimum EUAC (Equivalent Uniform Annual Cost) Formula:EUAC = P…

Q: McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and…

A: Payback period is the amount of time to recover initial investment. Payback period = Initial…

Q: The premium on a pound call option is $0.03 per unit. The exercise price is $1.60. The break-even…

A: Options are the derivative instruments that give the investor the option to take a position in the…

Q: Calculate the equity dividend rate using the following information: First year NOI: $ 89,100 Price…

A: The equity dividend rate is a financial metric used to evaluate the return earned by equity…

Q: Which of the following statements is true: Straight line interest method on bonds gives a higher…

A: Bonds are financial instruments that represent a loan made by an investor to a borrower, typically a…

Q: eBook A firm has two mutually exclusive investment projects to evaluate. The projects have the…

A: The equivalent annual annuity of the project is the annuity for the net present value of project…

Q: Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will…

A: Net income:= $139,070 - $82,000= $57,070

Q: Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more…

A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…

Q: XYZ corp expects to earn $4.1 per share next year and plow back 39.02% of its earnings (i.e., it…

A: PVGO= Stock price - (Expected earnings / Required rate)

Q: hristian now has $5 a. $753.92 b. $712.98 c. $750.06 Od. $766.48 e. $526.00

A: Future value of money is much more than the actual deposit due to compounding of the interest rate.

Q: WACC and target weights After careful analysis, Dexter Brothers has determined that its optimal…

A: A financial measure called weighted average cost of capital is used to evaluate how much it costs to…

Q: A) The executives of a company close to bankruptcy invest in a very risky project in order to try to…

A: Risk is the unpredictability or uncertainty around the possible results of an investment and it…

Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

8. A bond with a par value of 30,000 is priced at 108.40 of par and has 10 years remaining until
maturity. The bond has an 8% coupon rate, paid semi-annually. What is the amount of next
coupon payment?
A. 600
B. 1200
C. 2400
D. 3252
E. None of above
9. ABC common stock is expected to have extraordinary growth in earnings and dividends of
25% per year for year 2 and 3, after which the growth rate will settle into a constant 5%. If
the required return by investors is 13% and next year's dividend is 4. What should be the
approximate current share price?
A. 60.58
B. 65.10
C. 68.64
D. 73.56
E. None of above
10. An investor receives a 15% total return by purchasing a stock for 40 and selling it after one
year with a 5% capital gain. What is the selling price after one year?.
A. 40
B. 42
C. 44
D. 46
E. None of above
11. A stock has the following information. What is the stock price?
● Required rate of return: 14%
● ROE: 15%
● Plowed back ratio: 40%
Expected dividend: 1
●
A. 12.5
B. 13.5
C. 14.5
D. 15.5
E. None of above
5

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Honor Code Guidelines

VIEW

Step 2: Introduction

VIEW

Step 3: Calculation and Final Answer

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A $2,500 par value bond matures in 20 years and has a coupon rate of 8.5%. If the market's required yield to maturity for similar rated debt is 7.5%, what is the price of bond? The preferred stocks of a company pays a dividend of $1.50 at the end of each quarter, and it sells for $85 per share. What is the annual effective yield rate of the stock? 7 A- B I G EE 8 3
Q.1. Fahad & co issued a 10-year bond at par and promised to pay an annual coupon rate of 9%. Find the following if The required rate of return by the investor is 7%, 9% and 11% find the value of the bond today? Find the price of the bond in 4th year if rate of return required by the investor is 7% . Find the price of the bond in 6th year if rate of return required by the investor is 11%. Draw the timeline for this bond, showing current price
1. (a) Suppose a 6 percent coupon, $1,000 bond with ten years left to maturity is selling for $1,100. What is the yield, assuming that interest is paid quarterly? (b) Assume that the bond in (a) above pays interest semi-annually. What would the bond sell for, given that the investor/market wants to earn the same yield as calculated in (a)? (c) Assume that the bond in (a) above pays interest monthly. What would the bond sell for, given that the investor/market wants to earn the same effective yield as calculated in (a 2. A firm has just issued (January 1, 2018) a bond that has a face value of $1,000, a coupon rate of 7 percent paid semi-annually (June 30, December 31), and matures in 10 years. The bonds were issued with a yield to maturity of 6%. What price were the bonds issued at? Assume that on July 1, 2020, the bond trades to earn an effective yield of 9%. At what price should this bond be trading for on July 1, 2020? PRICE WHEN ISSUED: PRICE ON JULY 1, 2020:
K Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.0% (annual payments). The yield to maturity on this bond when it was issued was 6.0%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment? KIER After the first coupon payment, the price of the bond will be $. (Round to the nearest cent.)
1. A two-year bond with $1,000 face-value and 10% coupon rate is sold for $1,000 today (Year 1). If one year later (Year 2) the market interest rate decreases by 5%, then this bond will have a market price of $ ____ (round UP the nearest integer) next year (Year 2). 2. Using the one-period valuation model, assuming a year-end dividend of $11.00, an expected sales price of $110, and a required rate of return of 10%, the current price of the stock would be $ ________. 3. Last year you purchased a bond with an interest rate of 5 percent. Now the interest rate on the bond market drops to 4%. Then People can use a lower price to buy your bond today. (True or False)
9. A bond has a time-to-maturity of 8 years, a coupon rate of 5%, is currently selling for $1021.35. What is the bond's yield if it pays interest annually? A. 4.6740%. B. 5.6874%. C. 3.2654%. D, 4.0258%.
Fixed Income Securities4. Today is t = 0. You have just bought a five-year zero-coupon Treasurybond with $100 face value. You paid $80.(a) What is the annually compounded yield to maturity on the bond?(b) Suppose that yields at all maturities decrease to 2% immediately after you havepurchased the bond. Calculate the annualized holding period return if you sellthe bond one year after you have purchased it, at t = 1.(c) What is the annually compounded yield to maturity on the bond at t = 1?
A bond has a $1,000 par value, 8 years to maturity, and a 6% annual coupon and sells for $930. a. What is its yield to maturity (YTM)? Round your answer to two decimal places. 6.73 % b. Assume that the yield to maturity remains constant for the next five years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $ 1141.1
A bond has a $1,000 par value, 12 years to maturity,and an 8% annual coupon and sells for $980.a. What is its yield to maturity (YTM)?b. Assume that the yield to maturity remains constant for the next three years. What willthe price be 3 years from today?
Assume that a corporate bond has a par value of P1,000 and 8 years until it matures. This bond also has an annual coupon rate of 7.5%, but pays interest every 6 months. If investors require an annual nominal rate of return of 8.6% (compounded semi-annually), then what should be the current price for this bond? *
1. Suppose a five-year, $ 1000 bond with annual coupons has a price of $ 898.64 and a yield to maturity of 5.5%. What is the bond's coupon rate? 2.) The yield to maturity of a $ 1000 bond with a 6.8% coupon rate, semi-annual coupons, and two years to maturity is 7.8 % APR, compounded semi-annually. What must its price be? 3.) Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): The timeline starts at Period 0 and ends at Period 30. The timeline shows a cash flow of $ 19.01 each from Period 1 to Period 29. In Period 30, the cash flow is $ 19.01 plus $ 1,000. Period 1, 2,29,30 Cash Flows: $ 19.01, $19.01, $19.01, $19.01 + $1,000 a. What is the maturity of the bond ( in years)? b. What is the coupon rate (as a percentage )? c. What is the face value?
A bond has nine years to maturity, a $1,000 face value, and a 5.5% coupon rate with annual coupons. What is its yield to maturity if it is currently trading at $779? A. 9.22% B. 11.07% O C. 7.38% D. 12.91%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS