An investor purchases a 10-year, $5,000 facevalue bond that pays semiannual interest atannual rate of 10%. If the annual market rateof interest is 8%, what is the current marketvalue of the bond?$5,679.52$5,405.55$4,376.89$5,000.00

Detailed explanation:1. Semiannual Coupon Rate Calculation:Semiannual Coupon Rate=210%=5% 2. Coupon…

Answered: An investor purchases a 10-year, $5,000…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

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Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Required Assuming the market rate of interest is 10%, calculate the selling price for each bond issue.
An investor purchases a 20-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? A) $828. B) $893. C) $1,000. D) $1,686. *PV of $1 ordinary annuity is 17.15909: n = 40; i = 5% **PV of $1 is 0.14205: n = 40; i = 5% O A O B
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: O a. $1,124.62 O b. $1,086.15 O c. $ 957.50 O d. $826.31 O e. $1,032.20
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A bond pays $50,000 per year and has a face value of $500,000 at theend of 8 years when it has to be redeemed. If its current discounted priceis $390,000, what true interest could be earned on the bond? Ans. (14.9%)
A $1,000, 9.50% semiannual bond is purchasedfor $1,010. If the bond is sold after three years andsix interest payments, what should the selling pricebe to yield a 10% return on the investment?
an investor purchasea a 20-year, 1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what's the current market value of the bond?
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An investor purchases a 10-year, $5,000 face value bond that pays semiannual interest at annual rate of 10%. If the annual market rate of interest is 8%, what is the current market value of the bond? $5,679.52 $5,405.55 $4,376.89 $5,000.00