A bond with a face value of $10,000 pays interest of 3% per year. This bond will be redeemed at its face value at the end of nine years. How much should be paid now for this bond when the first interest payment is payable one year from now and a 5% yield is desired? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 3% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 5% per year.

A bond with a face value of $10,000 pays interest of 3% per year. This bond will be redeemed at its face value at the end of nine years. How much should be paid now for this bond when the first interest payment is payable one year from now and a 5% yield is desired? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 3% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 5% per year.

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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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).
A bond with a face value of $10,000 pays interest of 4% per year. This bond will be redeemed at its face value at the end of 10 years. How much should be paid now for this bond when the first interest payment is payable one year from now and a 5% yield is desired?
A bond with a face value of $5,000 pays quarterly interest of 3.5 percent each period. Thirty-four interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 8 percent compounded quarterly on your money? Click the icon to view the table of compound interest factors for discrete compounding periods when i=2%. You should pay ???
You purchased a bond and will receive $500every six months for the next five years. If the market rateof interest is 4%, what is the present value of your stream ofinterest payments? (a stream of equal interest payments isconsidered an annuity).
A bond with a face value of $6,000 pays quarterly interest of 3.5 percent each period. Twenty-two interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 6 percent compounded quarterly on your money? 9 Click the icon to view the table of compound interest factors for discrete compounding periods when i = 1.5%. You should pay s. (Round to the nearest cent as needed.)
Which of the following statements is true? You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Select one:
A bond with a face value of $11,000 pays interest of 3% per year. This bond will be redeemed at par value at the end of its 13-year life, and the first interest payment is due one year from now. If you want a 10% return rate, what is the highest price that you'd be willing to pay for the bond?"
A young engineering company is a subcontractor in an effort to develop technology that will reliably detect and respond to release of a nuclear weapon. The company is in need of additional funding and issues a series of $1,000 face value bonds that pay a nominal annual rate of 6% with quarterly payments. The bond matures in 6 years.
Over the next three years, the expected path of 1-year interest rates is 1, 2,and 1 percent, and the 1-year, 2-year, and 3-year term premia are 0, 0.2, and 0.5 percent, respectively. Using the information, today you buy $1 of one-year bonds and when it matures you plan to use the money you receive to reinvest in one-year bonds again. Then your expected rate of return for this $1 investment over the next two-year period is %. (round to the nearest integer)
A mortgage bond issued by Automation Engineering is for sale for $8,800. The bond has a face value of $10,000 with a coupon rate of 7% per year, payable monthly. What rate of return will be realized if the purchaser holds the bond to maturity 10 years from now? The rate of return will be % per year.
Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity. Required: a. Find the bond's price today and six months from now after the next coupon is paid. b. What is the total (6-month) rate of return on the bond? Complete this question by entering your answers in the tabs below. Required A Required B Find the bond's price today and six months from now after the next coupon is paid. Note: Round your answers to 2 decimal places. Current price Price after six months $ $ 1,052.42 1,044.52
You have an opportunity to purchase a bond that will pay out $815 in 10 months. If you would like to earn at least a 2.2% annual rate of simple interest on your investment, what is the largest amount the you should pay for the bond? Round your answer to the nearest cent.

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