Exam 15: Bond Valuation

A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August 10, 2033. The bond is sold on the primary market on December 10, 2013, to yield 5% compounded semi-annually. Determine a)calculate the market price; b)the accrued interest; c)the cash price.

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Question 1

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FV = $50 000; P/Y = C/Y = 2; PMT = 50 000 = $1 375.00;
a)The interest date preceding the purchase is August 10, 2013.
The time period until maturity is 20 years.
n = 20(2)= 40; i = = 0.025;
PP = 50 000(1 + 0.025)-40 + 1375 PP = 18 621.53118 + 34 516.3157 = $53 137.85
The purchase price is $53 137.85
b)The number of days from August 10, 2013 to February 10, 2014 is 184 days.
The number of days from August 10, 2013 to December 10, 2013 is 122 days.
PV = $53 137.85; r = = 0.0275; t = Interest = 53 137.85(0.0275) = $968.90
The accrued interest is $968.90
c)The cash price is $53 137.85 + 968.90 = $5 ,106.75

A $50 000.00, 6% bond with semi-annual coupons redeemable at par in 14 years is purchased to yield 8% compounded semi-annually. What is the gain or loss if the bond is sold four years before maturity at 99.25?

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Question 2

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What is the purchase price of a bond that is issued on May 1, 2002 for 22 years at a coupon rate of 9.4% compounded semi-annually? The purchase date of the bond is May 11, 2007 and the yield rate is 8.5% compounded semi-annually. The bond has a face value of $5000 and is redeemable at par.

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Find the gain or loss on the sale without constructing a bond schedule for a $100 000, 8% bond with semi-annual coupons redeemable at par purchased eleven-and-a-half years before maturity to yield 9% compounded semi-annually. The bond was sold five years later at 99.125.

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Question 4

A $100 000 bond is redeemable at 105 in 20 years. If interest on the bond is 5% payable semi-annually, what is the purchase price to yield 6% compounded semi-annually?

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Question 5

A $5000 bond that pays 6% semi-annually is redeemable at par in 14 years. Calculate the purchase price if it is sold to yield 8% compounded semi-annually.

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Question 6

A 4.5% annuity bond of $50 000 with interest payable quarterly is to be redeemable at par in seven years with a yield 6% compounded quarterly. What is the gain or loss if the bond is sold six years after the date of purchase at 99.625?

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Question 7

A 6.3% annuity bond of $12 000 with interest payable monthly is to be redeemable at par in nine years with a yield 7.9% compounded monthly. What is the gain or loss if the bond is sold eight years after the date of purchase at 101.325?

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Question 8

A $20 000, 3.6% bond with semi-annual coupons is purchased 5 years before maturity. Calculate the discount or premium if the bond is sold to yield 3% compounded semi-annually.

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Question 9

A $50 000, 4% bond with semi-annual coupons is purchased three years before maturity. Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.

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Question 10

A $150 000 bond bearing interest at 6% payable semi-annually is bought eight years before maturity to yield 4.5% compounded annually. If the bond is redeemable at par, what is the purchase price?

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Question 11

A $200 000, 6% bond with semi-annual coupons redeemable at par March 1, 2009, was purchased on November 15, 1999, to yield 5% compounded semi-annually. What was the purchase price of the bond?

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Question 12

Twenty $5 000 bonds redeemable at par bearing 6% coupons payable quarterly are sold eight years before maturity to yield 5.5% compounded annually. What is the purchase price of the bonds?

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Question 13

A $50 000 bond that pays 5% semi-annually is redeemable at par on July 15, 2025.It is quoted at 97.5 on December 2, 2013. Determine the yield rate.

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Question 14

A $100 000, 8.75% bond with interest payable annually is redeemable at 103 in four years. What is the purchase price to yield 7% compounded quarterly?

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Question 15

A $1000 bond, with interest at 8% payable semi-annually on January 1 and July 1, was purchased on October 8 at 104 plus accrued interest. What is the purchase payment for the bond?

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Question 16

Three 9.1% annuity bond of $15 000 with interest payable quarterly are to be redeemable at par in seventeen years with a yield 7.1% compounded quarterly. What is the gain or loss if the bond is sold six years after the date of purchase at 102?

(Multiple Choice)

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Question 17

Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to yield 3.5% compounded quarterly. Determine the premium or discount.

(Multiple Choice)

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Question 18

A $25 000, 7% bond with semi-annual coupons redeemable at par in twenty-two years is purchased to yield 6% compounded semi-annually. Determine the gain or loss if the bond is sold seven years after the date of purchase at 98.25.

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Question 19

A $100 000, 4% bond with semi-annual coupons is redeemable at 108. What is the purchase price to yield 5.5% compounded semi-annually seven years before maturity?

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Question 20

Showing 1 - 20 of 87

A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August 10, 2033. The bond is sold on the primary market on December 10, 2013, to yield 5% compounded semi-annually. Determine a)calculate the market price; b)the accrued interest; c)the cash price.

A $50 000.00, 6% bond with semi-annual coupons redeemable at par in 14 years is purchased to yield 8% compounded semi-annually. What is the gain or loss if the bond is sold four years before maturity at 99.25?

What is the purchase price of a bond that is issued on May 1, 2002 for 22 years at a coupon rate of 9.4% compounded semi-annually? The purchase date of the bond is May 11, 2007 and the yield rate is 8.5% compounded semi-annually. The bond has a face value of $5000 and is redeemable at par.

Find the gain or loss on the sale without constructing a bond schedule for a $100 000, 8% bond with semi-annual coupons redeemable at par purchased eleven-and-a-half years before maturity to yield 9% compounded semi-annually. The bond was sold five years later at 99.125.

A $100 000 bond is redeemable at 105 in 20 years. If interest on the bond is 5% payable semi-annually, what is the purchase price to yield 6% compounded semi-annually?

A $5000 bond that pays 6% semi-annually is redeemable at par in 14 years. Calculate the purchase price if it is sold to yield 8% compounded semi-annually.

A 4.5% annuity bond of $50 000 with interest payable quarterly is to be redeemable at par in seven years with a yield 6% compounded quarterly. What is the gain or loss if the bond is sold six years after the date of purchase at 99.625?

A 6.3% annuity bond of $12 000 with interest payable monthly is to be redeemable at par in nine years with a yield 7.9% compounded monthly. What is the gain or loss if the bond is sold eight years after the date of purchase at 101.325?

A $20 000, 3.6% bond with semi-annual coupons is purchased 5 years before maturity. Calculate the discount or premium if the bond is sold to yield 3% compounded semi-annually.

A $50 000, 4% bond with semi-annual coupons is purchased three years before maturity. Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.

A $150 000 bond bearing interest at 6% payable semi-annually is bought eight years before maturity to yield 4.5% compounded annually. If the bond is redeemable at par, what is the purchase price?

A $200 000, 6% bond with semi-annual coupons redeemable at par March 1, 2009, was purchased on November 15, 1999, to yield 5% compounded semi-annually. What was the purchase price of the bond?

Twenty $5 000 bonds redeemable at par bearing 6% coupons payable quarterly are sold eight years before maturity to yield 5.5% compounded annually. What is the purchase price of the bonds?

A $50 000 bond that pays 5% semi-annually is redeemable at par on July 15, 2025.It is quoted at 97.5 on December 2, 2013. Determine the yield rate.

A $100 000, 8.75% bond with interest payable annually is redeemable at 103 in four years. What is the purchase price to yield 7% compounded quarterly?

A $1000 bond, with interest at 8% payable semi-annually on January 1 and July 1, was purchased on October 8 at 104 plus accrued interest. What is the purchase payment for the bond?

Three 9.1% annuity bond of $15 000 with interest payable quarterly are to be redeemable at par in seventeen years with a yield 7.1% compounded quarterly. What is the gain or loss if the bond is sold six years after the date of purchase at 102?

Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to yield 3.5% compounded quarterly. Determine the premium or discount.

A $25 000, 7% bond with semi-annual coupons redeemable at par in twenty-two years is purchased to yield 6% compounded semi-annually. Determine the gain or loss if the bond is sold seven years after the date of purchase at 98.25.

A $100 000, 4% bond with semi-annual coupons is redeemable at 108. What is the purchase price to yield 5.5% compounded semi-annually seven years before maturity?

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