Exam 15: Bond Valuation and Sinking Funds

A $5000.00 6.5% bond redeemable at 109 with interest payable annually is purchased six years before maturity to yield 7% compounded annually.Construct the appropriate bond schedule.

Nine $10 000,4% bonds with interest payable semi-annually and redeemable at par are purchased 8.5 years before maturity.Find the premium or discount and the purchase price if the bonds are bought to yield 6%.

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.

Annual sinking fund payments made at the beginning of every year for four years earning 4.5% compounded annually amount to $25 000.00 at the end of four years.Construct a sinking fund schedule showing totals.

What is the quoted price of a bond that has 4.5 years until maturity? The face value of the bond is $5000 and it has a coupon rate of 8.1% compounded semi-annually and a yield rate of 8.6% compounded semi-annually.

From his retirement fund,Jack buys a $50 000,5.4% bond with quarterly interest coupons at 104.1,redeemable at par in 15 years.What is the approximate yield rate?

A $100 000,6.0% bond with semi-annual coupons redeemable at par is bought 17.5 years before maturity at 74.25.What was the approximate yield rate?

A $150 000 bond redeemable at par on October 1,2026,is purchased on January 15,2014.Interest is 6% payable semi-annually and the yield is 7.5% compounded semi-annually. a)What is the market price of the bond? b)How much interest has accrued? c)What is the cash price?

Six $1500 bonds with 4.5% coupons payable semi-annually are bought to yield 5% compounded monthly.If the bonds are redeemable at par in eight years,what is the purchase price?

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 $10 000,7.2% bond with semi-annual coupons is purchased 3 years before maturity.Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.

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.

OPG is required to create a sinking fund of $8.1 billion 80 years from the start of the plant by making equal deposits at the end of every month throughout the 50 years life of the Pickering plant.If the interest is compounded 7.2% monthly,how much of the fund is interest?

Nick buys a $25 000,5.4% bond with quarterly interest coupons,3 years before maturity,to yield 7% compounded quarterly.The bond was sold a year later at 102.What is the gain or loss on the sale of the bond?

A $1000,7% bond redeemable at par in eight years bears coupons payable annually.Compute the premium or discount and the purchase price if the yield,compounded annually,is: a)6.5% b)7.5% c)8.5%

A $1000,6.5% bond redeemable at par in four years bears coupons payable annually.Compute the premium or discount and the purchase price if the yield,compounded annually,is 7.5%.

A $25 000,8% bond with semi-annual coupons,redeemable at par in 12 years,is purchased to yield 6% compounded semi-annually.Determine the gain or loss if the bond is sold two years later at

Three $25 000,6% bonds with semi-annual coupons redeemable at par were bought eight years before maturity to yield 7% compounded semi-annually.Determine the gain or loss if the bonds are sold at 89.625 four years later.

The Town of Snow Lake issued debentures worth $420 000.00 maturing in 15 years to finance construction of recreational facilities.To redeem the debentures,the town council decided to make equal deposits into a sinking fund at the beginning of every three months.Interest earned by the sinking fund is 6.66% compounded quarterly. a)What is the size of the quarterly payment into the sinking fund? b)What is the balance in the fund after six years? c)How much interest is earned by the fund in the 25^th payment interval? d)By how much will the fund increase in the 43^rd payment interval? e)Prepare a partial sinking fund schedule showing details of the first three payments,the last three payments,and totals.

A $5000,6.25% bond with interest payable annually redeemable at par in eight years is purchased to yield 7.5% compounded annually.Find the premium or discount and the purchase price and construct the appropriate bond schedule.