A $10 000, 10.5% bonds with quarterly coupons is redeemable at par on August 1, 2025. a) Find the cash price five years before maturity if the market rate is 10.5% compounded quarterly. b) Find the cash price two years before maturity if the market rate is 8.5%, compounded quarterly. c) Find the cash price 23 months before maturity if the market rate is 8.5%, compounded quarterly.

A $10 000, 10.5% bonds with quarterly coupons is redeemable at par on August 1, 2025. a) Find the cash price five years before maturity if the market rate is 10.5% compounded quarterly. b) Find the cash price two years before maturity if the market rate is 8.5%, compounded quarterly. c) Find the cash price 23 months before maturity if the market rate is 8.5%, compounded quarterly.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
A $10,000 bond with a coupon rate of 5% was redeemable on July 1, 2028. It was purchased on September 10, 2015 when the yield rate was 6% compounded semi- annually. Determine the purchase price of the bond. Paragraph IU ... Purchase Date: Redemption Date: 取 A
A $15,000 bond with a coupon rate of 4% compounded semi-annually is redeeemable on February 1, 2024. It was purchased on June 13, 2018 when the yield rate was 5% compounded semi-annually. What is the purchase price of the bond?
On January 1, 2024, Tableau Company issues $20 million of 9% bonds, due in six years, with interest payable semiannually on June 30 and December 31 each year. Use a financial calculator or Excel. Required: 1. If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. 2. If the market rate is 9%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. 3. If the market rate is 10%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. Help Save & (Do not round intermediate calculations. Round final answer to the nearest dollar amount. Enter your answer in dollars, not in millions.) 1. The bonds issue at 2. The bonds issue at 3. The bonds issue at and the issue price is and the issue price is and the issue price is
On June 1st, 2020, Coca Cola (KO) issued bonds for one billion dollars. The bonds have a par value of $1,000, coupon rate of 2.75% payable semiannually, and 40 years maturity (maturity date: 6/1/2060). What is the average annual return for an investor who purchased these bonds at launch (6/1/20) for $970.30 and sold them three years later (6/1/23) for $681.83? HINT: Don’t divide HPR/3. Consider the effects of compounding. Find the annual interest rate that would make the initial investment of $970.30 become $681.83 after three years. -9.90% per year. -9.50% per year. -0.95% per year. +9.90% per year.
Consider an investor who, on January 1, 2022, purchases a TIPS bond with an original principal of $111,000, an 10 percent annual (or 5 percent semiannual) coupon rate, and 15 years to maturity. a. If the semiannual inflation rate during the first six months is 0.5 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2022). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 1.3 percent. Calculate the inflation-adjusted principal at the end of the second six months (on December 31, 2022) and the coupon payment to the investor for the second six-month period. (For all requirements, round your answers to 2 decimal places. (e.g., 32.16)) a. Principal amount Coupon payment b. Inflation-adjusted principal c. Inflation-adjusted principal at the end of the second six months…
A bond that has a face value of $1,500 and coupon rate of 3.20% payable semi-annually was redeemable on July 1, 2021. Calculate the purchase price of the bond on February 10, 2015 when the yield was 3.70% compounded semi-annually. $0.00
On January 1, 2020, Company H issues a $20,000,000 bond with a 9% coupon rate. The bond has a present value of $20,811,010, and the market interest rate was 8%. The bond will have a 5-year life, pay interest semi-annually, and amortize using a straight line. The bond's face value, a discount, or a premium? B) How much would the semi-annual interest payments cost? C) How much will be added to interest expense each time a payment of interest is made? D) What will be the bond's carrying value on December 31, 2021?
Company I issues a $40,000,000 bond on January 1, 2020 with a coupon rate of 7%. The present value of the bond is $37,282,062 and the market rate of interest was 8%. The bond has a 10-year life and will make semiannual interest payments and will use the straight line amortization method. A) Is the bond issued at a face value, a discount, or premium? B) What is the amount of the semi-annual interest payments? C) What is the amount that will be recorded to interest expense each time an interest payment is made? D) What is the carrying value of the bond on December 31, 2021?