What’s the return that Zen will earn if he holds the bond till maturity?

Steve is a bond th Present extra Company Bond Issues Please present your work Present Yield 1. Steve is a bond that pays a 5.75% coupon and is at the moment promoting for $1052.50. What’s the present yield? 2. Tina is a bond that has a coupon of 6 3/8 and is at the moment promoting for $867.50. What’s the present yield? 3. City is a bond with a coupon of 5 1/2%. Market rates of interest have dropped for the reason that bond was issued. He could be keen to speculate if he might earn a present yield of 4%. How a lot would City be keen to pay for this bond? 4. Vince has his eye on a bond with a coupon of three 7/8%. If he desires to earn a present yield of 6% on his funding how a lot will Vince be keen to pay for this bond? 5. Wilson owns a bond with a coupon of 6%. He purchased it when the present yield was 7%. The present yield is now 5%. How a lot did he pay for the bond? What’s the bond price in the present day? If he offered it what would his achieve or loss be? 6. Xena owns a bond with an 8.5% coupon. She purchased it for $1050.00. She might promote it in the present day primarily based on a present yield of 8 %. What was the present yield when she purchased it? What worth might she promote it for in the present day? What could be her achieve or loss if she offered it? Zero Coupon Bonds 7. Zen lately purchased a zero coupon bond for $245. It matures in 23 years and can pay $1000 at maturity. What’s the return that Zen will earn if he holds the bond till maturity? 8. Abigail is a zero coupon bond that may pay $5000 at maturity in 13 years. She won’t make investments until she will be able to earn not less than 6.5% on her cash. What’s the most she can pay for the bond? 9. Billy Bob purchased a zero coupon bond 2 years in the past for $425. It matures in 9 years when it can pay $1000. What is going to Billy Bobs fee of return be? 10. Chuck desires to earn 7.5% on his zero coupon bond that matures in 19 years. It has a face worth of $1000. What would he be keen to pay in the present day? Yield to Maturity (YTM) Issues 11- 16: Calculate two methods: First assuming annual curiosity funds and second assuming semi-annual funds (price two factors every) 11. Darcie is a bond that she will be able to purchase for $809.50. It matures in 15 years and has a coupon fee of seven.5%. If she had been to buy this bond what yield to maturity would she earn? 12. Eunice is a bond that has a 6.5% coupon and can mature in 7 years. If her aim is to earn a YTM of 8% what would she be keen to pay in the present day to buy the bond? 13. Fred receives a name from his dealer who has a bond that’s promoting for $646.50. It matures in 11 years and has a coupon of 5.5%. If Fred the place to buy this bond what YTM would he earn? 14. Garth desires to speculate solely in Funding grade bonds or higher. His technique is to carry the bond till maturity and he desires to earn a YTM of 8% or higher. He’s provided a bond with a coupon of 6% and eight years to maturity at a worth of $890.00. If he buys it can it meet his funding objectives? 15. Hallie is obtainable a bond with a face worth of $5000. It has a coupon of 6.75% and matures in 17 years. If Hallie requires a 5% return on her funding what would she be keen to pay for the bond? 16. Isabella has simply $750.00 to purchase a bond that she likes. The bond matures in 6 years and has a coupon fee of seven%. If Isabella is ready to purchase the bond what fee of return will she earn? Municipal Bond and Most well-liked Inventory Issues 17. (2 factors) The Davis Co. has issued a most well-liked inventory that pays a dividend of $7.25 per 12 months. If the inventory at the moment sells for $96.35 per share what’s the required return? What could be the required return if the inventory worth was $107.80? 18. A most well-liked inventory sells for $45.65 a share and has a market return of seven.67 p.c. What’s the dividend quantity? 19. ABC Financial institution has a collection of most well-liked inventory with a par worth of $100 that it simply issued for $104 per share. The annual dividend is $7.35. In share phrases what’s the price of the popular inventory to the financial institution? 20. Steve has a marginal tax fee of 35%. He can put money into a company bond that’s buying and selling at a YTM of 5.1% or a municipal bond that’s buying and selling at a YTM of three.4%. Examine each bonds and decide which affords Steve the very best after tax yield. 21. Dave has a marginal tax fee of 28%. He can put money into a municipal bond buying and selling at a YTM of 4.4 p.c or a company bone with a YTM of 5.5 p.c. Examine each bonds and decide which affords Dave the very best pre tax yield. 22. Michelle has a marginal tax fee of 31%. She will put money into a municipal bond buying and selling at a YTM of two.35 % or a company bone with a YTM of three.41 %. Examine each bonds and decide which affords Michelle the very best pretax yield. Present much less

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