The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the selling agency and will pay $300.00 to the buyer every year. The bond matures in ten years and the firm pays $3000.00 to the buyer at the end of the tenth year. What is the effective rate of return on this bond to the firm offering it?
Q: Fu-Wang Ceramics Limited has an outstanding bond that has a face value equal to $1000 and a 10…
A: Yield to maturity of the bond is the rate of return that will be earned by the bondholder if…
Q: A company issued a bond a few years ago that has a face value equal to $1,000 and pays investors $30…
A: Given information: Par value : $1000 Semi-annual coupon payment : $30 time to maturity : 8 years…
Q: A $1,000 face value bond issued by the Purud Company currently pays total annual interest of $80 per…
A: In financial calculator: Enter FV = 1000 Enter n = 13 (life of the bond) Enter PMT = 80 (interest)…
Q: An investor purchases a bond 6 months after the issue. The bond will be redeemed at 105% eight years…
A: Price of a bond = present value of its future cashflows, let the purchase price be = P Hence, P =…
Q: A BobCo bond with a face value of $100 matures in one year. There is a 50% chance that BobCo will go…
A: To find the market interest rate, we will first have to find the expected value to be received. We…
Q: A 6-percent corporate coupon bond is callable in 10 years for a call premium of one year of coupon…
A: Par value of bond = 1000 Coupon rate = 6% Coupon amount = 1000 * 6% = 60
Q: Suppose that Ford issues a coupon bonds at a price of $1,000, which is the same as the bond's par…
A: In the given question we required to tell the payment investor would receive every year except last…
Q: Ten bonds are purchased for $8.856.11 and are kept for 5 years. The bond coupon rate is 9% per year,…
A:
Q: Ten bonds are purchased for $9,598.13 and are kept for 5 years. The bond coupon rate is 7% per year,…
A: A bond is a debt instrument that is issued by governments and companies which forwards them a loan…
Q: Company XYZ has a bond with par value of $1,000 that will mature in 20 years. The bond pays coupon…
A: Bonds: Bonds are the debt obligations of a business on which it requires to pay regular interest to…
Q: Thatcher Corporation’s bonds will mature in 15 years. The bonds have a face value of $1,000 and a 6…
A: Using financial caluclator, N (No. of compounding periods) = 15*2 =30 PV (Price of bond) = -1100 FV…
Q: Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8…
A: Price of a bond = Present value of cash flow that will receive in the future In the given case, The…
Q: A 6 percent corporate coupon bond is callable in five years for a call premium of one year of coupon…
A: Bonds are the fixed interest bearing securities that are issued by the companies.
Q: A bond with face value of Php 1,000 is selling at Php 950. The maturity of the bond is one year. How…
A: The capital gain on the financial securities refers to the gain and loss arising due to the sale and…
Q: Blossom, Inc., has issued a three-year bond that pays a coupon rate of 6.0 percent. Coupon payments…
A: Bonds are a kind of debt financial instrument which is a fixed-income investment vehicle that…
Q: Rogue Racing Inc. has $1,000 par value bonds with a coupon rate of 8% per year making semiannual…
A: Yield to maturity (YTM) is the rate which an investor earns when the bond is held till its maturity.
Q: ABC company is issuing eight year bond with coupon rate of 6.5% and semi annual coupon payments.If…
A: Given Information: Coupon Rate = 6.5% Required Return = 8% Time Period = 8 years Amount to be raised…
Q: A 6 percent corporate coupon bond is callable in five years for a call premium of one year of coupon…
A: Given: Face value = $1000 Coupon rate = 6% = 0.06 The formula to compute the total price paid is:…
Q: pany XYZ has a bond with par value of $1,000 that will mature in 20 years. The bond pays coupon rate…
A: Bond price refers to the total of the present values of all anticipated coupon payments plus the…
Q: A 15 years bond with annual coupon rate equal to 10% (paid semiannually), if the par value of the…
A: A bond is considered as a fixed-income instrument. A bond represents the loan provided by the…
Q: The Ara Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Renfro Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8%…
A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: Ten bonds are purchased for $ 9,340.69 and are kept for 5 years. The bond coupon rate is 6% per…
A: Given 10 bonds are purchased for 9340.69 and the face value of bonds should to be calculated. Let…
Q: The Saleemi Corporation's $1,000bonds pay 5 percent interest annually and have 13 years until…
A: A. Yield to maturity = [Interest +(Maturity value - Purchase Price)/number of years of…
Q: GHI Company issued a 7-year bond on January 2, 2020, with a par value of $550,000 and pays its…
A: present value of par value can calculated using period of MATURITY and interest rate.
Q: What is the yield to maturity on a bond that has a price of $1,600 and pays $100 interest annually…
A: Bond which is selling above par value is called premium bond
Q: The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 10…
A: Hence, the semi -annual interest payment is $44.5.The semi- annual interest payment is calculated by…
Q: Capex Inc. issues a bond of $1,000 which pays interest semiannually at a coupon interest rate of…
A: Capital markets is defined as the market, where the places of an investments as well as savings are…
Q: Gabriele Enterprises has bonds on the market making annual payments, with 12 years to maturity, a…
A: Face value = $1,000 Price of bond = $820 Yield to Maturity = 11% Time Period = 12 Years
Q: A bond with a face value of $5,000 pays interest of 8% per year. This bond will be redeemed at par…
A: Information Provided: Face value = $5000 Coupon rate = 8% Term = 20 years Yield = 10%
Q: Wilson Corporation’s bonds have 15 years remaining to maturity. Interest is paid annually, the bonds…
A: Working note:
Q: An 8-year bond for Rusk Corporation has a market price of $700 and a par value of $1,000. If the…
A: In this question we need to calculate the yield to maturity of bond. We can calculate yield to…
Q: A bond promises to pay you $7,000.00 in 10 years. If you are able to earn 6 percent on securities of…
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…
Q: You own a $1,000 face value Bear Stearns Bond with a 6.5% coupn with semiannual coupons, the bond…
A: Yield to maturity on the bond is yield accrued to the investor if held the bond till maturity
Q: Jackson Corporation's bonds have 10 years remaining to maturity. Interest is paid annually, the…
A: Bond is a long-term debt instrument which is used by organizations to raise debt from…
Q: BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar…
A: Note: You have posted several different questions at once. I have answered the first question in…
Q: Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1 000 and an…
A: Different financial institutions and corporate houses use bonds as a form of financial debt to raise…
Q: On September 1, 2012, an investor purchases a $10,000 par T-bond that matures in 12 years. The…
A: Given information : Price of T-bond = $10,000 Maturity period = 12 years Coupon rate = 6% Yield = 7%…
Q: A bond matures in 20 years, at which time it pays the owner $1,000. It also pays $70 at the end of…
A: Year of Bond =20 Annual payment =$70 Face Value =$1000
Q: suppose a company issues $10,000 face value discount bond maturing in one year What's the price of…
A: Discount Bond is sold at price below par value with no interest payments and difference between…
Q: corporation’s bonds mature in 23 years and pay 7 percent interest annually. If you purchase the…
A: The given problem can be solved using RATE function in excel. RATE function computes yield to…
Q: If the price of the bond is $1750, its yield to maturity is 10.5 percent , it matures in 6 years and…
A: Formula for Yield to maturity is: YTM = C + F - P/n F + P/2 Formula for bond price is:…
Q: BEST Company bonds are yielding 12% and will mature in 10 years from now. The coupon rate is 14%…
A: Price of the bond = Coupon Amount * PVAF ( Semi annual rate, Number of periods ) + face value * PVIF…
Q: A corporate bond has a face value of $10,000, a bond interest rate of 8% per year payable…
A: A bond is a fixed income instrument that represents a loan made by an investor to a borrower…
Q: Give the approximate yield to maturity for a $1,000 par value bond that is selling for $1,120 and…
A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…
Q: You will receive $60 interest every six months from your investment in a corporate bond. The bond…
A: a) What is the present value of the bond in the absence of inflation if the market interest rate is…
Q: Carrie's Clothes, Inc. has a seven-year bond outstanding that pays $50 annually. The face value of…
A: Ans 1. Bond's coupon rate is defined as the yield of coupon rate through the fixed income security…
Q: Dausin Design offers bonds with a coupon rate of 9 percent per year, paid semiannually. The yield to…
A: Solution:- We know, Current Price of a bond = Present Value of Cash Inflows receivables from bond.…
The face
Step by step
Solved in 4 steps with 2 images
- You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You initially pay $950 for the bond. You receive an annual interest payment after one year, then sell the bond for $880. What is your total rate of return on the investment, expressed as a percentage of the purchase price?A newly issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%.a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7% by the end of the year.b. If you sell the bond after one year, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount tax treatment.c. What is the after-tax holding-period return on the bond?d. Find the realized compound yield before taxes for a 2-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield is 7% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 3% interest rate.e. Use the tax rates in part (b) to compute the after-tax 2-year realized compound yield. Remember to take account of OID tax rules.Carries Clothes, Inc. has a five -year bond outstanding that pays $60 annually. The face value of each bond is $1,000, and the bond sells for $890. Use semi- annual interest payments if it applies. What is the bond’s coupon rate? What is the current yield? What is the yield to maturity?
- If a bond is issued at the price of $10,000 per contract and promises a 5.7% interest every year, the contract will be redeemed by the issuer at a discount after 8 years for $9,200. If the market is offering a return of 4.8% for similar risk securities, what would be the price you are ready to offer for this bond?A bond with a face value of $5,000 pays interest of 8% per year. This bond will be redeemed at par value at the end of its 20-year life, and the first interest payment is due one year from now. Solve, (a) How much should be paid now for this bond in order to receive a yield of 10% per year on the investment? (b) If this bond is purchased now for $4,600, what annual yield would the buyer receive?A mortgage bond issued by Automation Engineering is for sale for $7,700. The bond has a face value of $10,000 with a coupon rate of 6% per year, payable semi-annually. What rate of return will be realized if the purchaser holds the bond to maturity 6 years from now? The rate of return will be % per year.
- A newly issued bond pays its coupons once annually. Its coupon rate is 5.4%, its maturity is 20 years, and its yield to maturity is 12%. Required: Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 11% by the end of the year. If you sell the bond after one year, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount tax treatment. What is the after-tax holding-period return on the bond? Find the realized compound yield before taxes for a 2-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield is 11% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 3% interest rate. Use the tax rates in part (b) to compute the after-tax 2-year realized compound yield. Remember to take account of OID tax rules.A bond promises to pay the bondholder equal payments of php 6000.00 in six month interval for 30 years. if the face amount is php 450000. What is the fair price of the bond ? Assume that market rate is 2% compounded annually?A bond is currently selling for $1040. It pays the amounts listed in the picture at the ends of the next six years. The yield of the bond is the interest rate that would make the NPV of the bond’s payments equal to the bond’s price. Use Excel’s Goal Seek tool to find the yield of the bond.
- A 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.An investor is considering the purchase of a bond. The bond has a face value of $1000 and an interest rate of 6%; it pays interest once a year and matures in 8 years. This investor’s real MARR is 25%. If the investor expects an inflation rate of 4% per year for the next 8 years, how much should he be willing to pay for the bond?Consider a bond paying a coupon rate of 10% per year semi-annually when the market interest rate is only 4% per half-year. The bond has three years until maturity. This initial payment is $1000. A: What is find the bond’s price today and 6 months time after the next coupon is paid? B: What is the total rate of return on the bond?