Suppose X Corp. issued one-year discount bonds with a face value of $5,000 and the bonds were sold for $4,800. What was the interest rate for these one-year discount bonds? 4.00% 4.17% 5.10% None of the above
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- A corporate bond maturing in 15 years with a coupon rate of 10.9 percent was purchased for $970 and it now selling for $1,000. 1. What will be its selling price in two years if comparable market interest rates drop 4.9 percentage points? (Hint: Use Appendix A-2 and Appendix A-4 or the Garman/Forgue companion website.) Round Present Value of a Single Amount and Present Value of Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest cent. $ 2. Calculate the bond's YTM using Equation 14.5 or the Garman/Forgue companion website. Round your answer to two decimal places. %An investor has the opportunity to make an investment that will provide an effective annual yield of 16.5 percent. She is considering two other investments of equal risk that will provide compound interest monthly and quarterly, respectively. Required: a. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest monthly to ensure that an equivalent annual yield of 16.5 percent is earned? b. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest quarterly to ensure that an equivalent annual yield of 16.5 percent is earned? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. a. Equivalent nominal annual rate-monthly compounding b. Equivalent nominal annual rate-quarterly compounding % %which of the following bonds should you buy when interests rates are expected to go up? a) 5 year , 15% coupon b) 5 year 5% coupon c) 25 year 15% coupon d) 25 year 5% coupon
- Calculate the annual interest (in $) and current yield (as a %) of the bond. (Round your percentage to one decimal place.) Company Coupon Rate Annual Interest Market Price Current Yield Company 5 7.25% $ 107.00 %Suppose Ford Motor Company issues bonds with a face value of $500 and an annual coupon payment of $20 What is the interest rate Ford is paying on the borrowed funds? The interest rate is percentWhich of the following $1,000 face-value securities has the highest yield to maturity? A) a 5 percent coupon bond with a price of $600 B) a 5 percent coupon bond with a price of $800 C) a 5.25 percent coupon bond with a price of $1,200 D) a 5 percent coupon bond with a price of $120
- Ex: Consider a discount bond that has a 1000 TL face value. Current price of the bond is 900 TL and the bond has two years to maturity. What is the yield to maturity for this bond?Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest $4,000 in the same stock this year. Alexx invests directly and earns 4% a year. Spenser uses a retirement fund and eams 3.75%. If Alexx and Spenser leave their investments in place for 30 years, with annual compounding of the interest, how much more will Alexx have than Spenser at the end of the 30-year period? Alexx will have more than Spenser after 30 years. (Enter your response rounded to two decimal places.)Consider a 25-year loan with an annual interest rate of 7 percent and monthly payments of $1,201.53. The discount points charged by the lender at origination are 3 percent and the cost of borrower title insurance and mortgage insurance are, respectively, 0.5 percent and 2.0 percent of the loan amount. Additional fees paid to other third parties (i.e., not the lender) will equal $4,000. What is the loan amount? What is the lender’s yield/IRR? What is the effective borrowing cost (EBC)? USE EXCEL
- Based on the concept of present value, the yield to maturity of a coupon bond is calculated by: P C/ (1+i) + C/ (1+i) 2 + C/ (1+i) 3 + .C/ (1+i)" (P stands for the price of bond, C for the coupon payments, i for the yield to maturity, and n for the years to maturity.) True FalseEconomics In 54 months time you expect a cash flow of $3 million. Calculate it’s present value (PV) given the 54-month interest rate is currently 4%, with a volatility of 120 basis points (bps). Explain, using equations with properly-defined mathematical notation, how to map this cash flow to vertices at 4 years and 5 years, in such a way that the volatility of the present value of the mapped cash flow remains at 120 bps. Suppose the 4-year rate has a volatility of 110 bps and the 5-year rate has a volatility of 150 bps, and their correlation is 0.9. How much should be mapped to each vertex. Give your answer in PV terms and round your answers to whole $ values.1. Jenkins Security has learned that a rival has offered to supply a parking garage with security for ten years for $45,000 up front and a further $15,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of $60,000 and a separate yearly payment, by what maximum amount can this yearly payment be over $10,000, so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 5%.)