A savvy investor paid $6000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what rate of return did the investor make (a) per quarter, and (b) per year (nominal)?

Q: Grandpa Russ thinks he needs a fixed income for the next 10 years. He currently has $10,000 in CDs,…

A: Please find the answers to the above questions below:

Q: An investor pays $30,000 for a convertible bond (one that can be converted into shares of corporate…

A: The convert price is the price per share at which a convertible security may be exchanged into…

Q: You investing at a fixed 8.5% for the next 30 years. How much would you have to save each month for…

A:

Q: Last year Janet purchased a $1,000 face value corporate bond with an 12% annual coupon rate and a…

A: YTM is the rate of return a bond will generate if it is held until maturity. It is that discounting…

Q: Stacy purchases a $60,000 bond for $57,500.  The coupon rate is 6% per year payable quarterly.  The…

A: Bonds are debt securities issued by Government or other companies, who seek to raise money from…

Q: A savvy Investor paid $7,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of…

A: Given: Particulars Amount Invested $7,500 Year 20 Mortgage $10,000 Interest rate 12%…

Q: A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2%…

A: Given: Particulars Amount   Invested $5,000   Year 20   Mortgage $10,000   Interest rate…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A: Given information: Par value of bond is $10,000 Purchase price is $9,500 Bond rate is 6.6% per year…

Q: Last year Janet purchased a $1,000 face value corporate bond with a 9% annual coupon rate and a…

A: Face Value = 1000 Coupon = Coupon Rate × Face Value = 9% × 1000 = 90 Time Period (N) = 15 years YTM…

Q: Jimmy has a bond with a $1,000 face value and a coupon rate of 8.5% paid semiannually. It has a…

A: GIVEN, par = $1000 coupon rate = 8.5% m =2 ( semi annual) n = 5 r = 12%

Q: Bert owns a bond that will pay him $75 each year in interest plus a $1,000 principal payment at…

A: In the given question we are given information about a bond and we need to choose the correct answer…

Q: You plan to invest in bonds that pay 3.25%, compounded annually. If you invest $10,000 today, how…

A: Given: Interest rate is 3.25% Present value $10,000 Future value = $30,000 Number of years =?

Q: John buys a 10-year bond with annual coupons. The par value of this bond is 10000 as is the…

A: IRR is the minimum return which is required by an investor to make a profitable investment.

Q: Today, Joe paid $12,000 for a bond which has $10,000 face value. The bond coupon rate is 10% per…

A: The yield to maturity is rate of return realized on the bond when held till maturity of bond period…

Q: An investor buys a $1000 face value bond paying a semi-annual coupon at 9% APR compounded…

A: We need to use RATE function in excel to calculate realized  Formula is =RATE(NPER,PMT,-PV,FV)

Q: You want to buy a 10-year bond with a maturity value of $2,000, and you wish to get a return of 5.5%…

A: Present value is the value of money today is worth more than that same amount in the future. It is…

Q: Last year, Joan purchased a $1,000 face value corporate bond with an 8% annual coupon rate and a…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Bill wants to buy a bond. It has a face value of $10,000, a bond rate of 4% (nominal), payable…

A: Solution:- Bond price means the price at which the bond is currently trading in the market. We know…

Q: Mike buys a corporate bond with a face value of $1000 for $800. The bond matures in 10 years and…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Tran Jiang has $2,000 to invest. Usually, he would deposit the money in his savings account, which…

A:

Q: A bondholder purchased an 8 percent coupon, $1,000 par three-year bond at a 7 percent yield.…

A: Given information: Par value of bond is $1,000 Coupon rate is 8% Yield percentage is 7% Call price…

Q: James invested $1000 in a portfolio of stocks 5 years ago and reinvested the dividends. The…

A: Using financial calculator, Insert

Q: 4.   You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. What is…

A: The holding period rate of return would be calculated by using the following formula:Rate of…

Q: Four years earlier, Janice purchased a $1,000 face value corporate bond with a 6% annual coupon and…

A: Purchase price = Coupon Amount * PVAF ( Yield, Years ) + Face value * PVIF ( Yield, Years )

Q: A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2%…

A: Rate of return on a bond is the rate which denotes the total return which an investor will get from…

Q: A savvy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8%…

A: Current Price  $                                      6,000.00 Bond Price  $…

Q: A savvy investor paid $7000 for a 20 year $10.000 mortgage bond that had a bond iterest ate of per…

A: Rate of return is defined as the net gain or net loss of an investment over the particular period of…

Q: rs after he purchased the bond, market interest rates went down, so the bond increased in value. If…

A: Given information : Price paid = $6500 Time period = 20 years Face value = $10,000 Interest rate =…

Q: Five years ago you paid $10,000 for five, 10-year $2,000 bonds to help finance Engineer Paul's worm…

A: A bond is a financial debt security that is sold by governments or large business entities to borrow…

Q: You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You…

A: Rate of return is the percentage of profit earned from an investment. Given: Face value of bond is…

Q: You own a $50,000 corporate bond with a bond interest rate of 6% payable monthly that is due 10…

A: The selling price will be limited to the present value of the future cash flows from the bond.

Q: 10 years ago, your faughter bought 4(four),7% semi- annual coupon bond with a 25 year maturity, at…

A: A bond is financial security sold by business entities to raise borrowing capital for a financial…

Q: James Smith bought 10-year bonds issued by Harvest Foods five years ago for $930.00. The bonds make…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Last year Janet purchased a $1,000 face value corporate bond with an 8%annual coupon rate and a…

A: ROR is the rate at which the investor will earn the profit or incur loss on the investment. It does…

Q: An engineer planning for retirement is considering purchasing a savings bond with a face value of…

A: An investor purchases an asset if the current value of asset is more than the purchase price.…

Q: Manuel bought a $100,000 bond with a 5.2% coupon for $92,420 when it had five years remaining to…

A: Yield to MATURITY is discount rate at which present value of coupon payment and present value of par…

Q: . You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid…

A: Rate of return earned is the annual return on investment realized.

Q: Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is…

A: a) Hence, the first 5 years the bond has paid $4200.

Q: If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.7% coupon every year for the…

A: Real rate of return = (1+nominal rate)/(1+inflation rate)-1 Nominal rate of return of bond is the…

Q: Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a…

A: Given that;Face value is $1000Time period is 15 years Yield to maturity is 10.45%

Q: A bond with a face value of $1000 can be purchased for $800. The bond will mature 5 years from now,…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: An investor is considering the purchase of a bond. The bond has a face value of $1000 and an…

A: Bond valuation means the determination of fair price of a bond. Present value of a stream of cash…

Q: Suppose that an investor opens an account by investing $1,000. At the beginning of each of the next…

A: given information   the investor opens an account by investing $1000 the investor actual…

Q: Vic Zaloom bought a corporate bond from IBEM Corporation for $100,000. The face value of the bond is…

A: In the given question we need to compute the effective rate of return on bond investment.

Q: Yesterday, John bought a ten-year, $50,000 coupon bond with an annual rate of 5% compounded…

A: Bonds are debt instruments that companies issue in order to raise funds in the form of debt.…

Q: Douglas purchased a $10,000, 8% quarterly bond at face value. He held the bond for five years,…

A: The sales price for bond implies to the consideration amount paid by investor for purchasing bond.…