Question 1

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?

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Question 2

Find the gain or loss on the sale without constructing a bond schedule for three $100 000, 5.5% bonds with quarterly coupons redeemable at par on September 1, 2017, bought on May 1, 2011, to yield 6% compounded quarterly. The bonds were sold on January 21, 2014, at 93.5.

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Question 3

Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to yield 7% compounded quarterly. Calculate the shortage of the actual interest received compared to the required interest based on the yield rate.

Accepted Answer

A) $337.50 
B) $437.50 
C) $100 
D) $1350 
E) $1750

Question 4

Clarington issued 15 year bonds in the amount of $500 000. Interest on the bonds is 2.2% payable annually. What is the promised payment at the end of each year?

Accepted Answer

A) $11 100 
B) $693 000 
C) $360 750 
D) $374 675 
E) $13 925

Question 5

Find the gain or loss on the sale without constructing a bond schedule for six $5000, 9.5% bonds with interest payable semi-annually redeemable at par bought twenty-one years before maturity to yield 10.5% compounded semi-annually. The bonds were sold three years later at 103.625.

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Question 6

A $100 000.00, 7% bond with semi-annual coupons redeemable at 105 on November 1, 2001, is purchased on July 23, 1999, to yield 8% compounded semi-annually. Determine the quoted price.

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Question 7

A $50 000.00, 8% bond with quarterly coupons redeemable at par is purchased five years before maturity to yield 4% compounded semi-annually. Determine the premium or discount.

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Question 8

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.

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Question 9

A $100 000 bond, redeemable at 110 in seven years with 6.75% coupons payable annually, is bought to yield 7.25% compounded annually.
(i)Determine the discount and the purchase price.
(ii)Construct a schedule of accumulation of discount.

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Question 10

Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to yield 7% compounded quarterly. Determine the premium or discount.

Accepted Answer

A) $4698.55 premium 
B) $4698.55 discount 
C) $3624.60 discount 
D) $1073.95 premium 
E) $1073.95 discount

Question 11

A $250 000, 7% bond redeemable at par with interest payable semi-annually is bought 4 years before maturity. Determine the premium or discount and the purchase price if the bond is purchased to yield:
a)6.5% compounded semi-annually
b)8% compounded semi-annually

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Question 12

A $40 000 bond with semi-annual coupon payments at 5.5% compounded semi-annually is redeemable at par in 12 years. Calculate the yield rate if the bond is purchased at 102.5.

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Question 13

A $100 000, 9.0% bond with semi-annual coupons redeemable at par on March 1, 2015, was purchased on September 22, 2007, to yield 10.00% compounded semi-annually. What was the purchase price?

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Question 14

A $100 000, 8% bond with semi-annual coupons redeemable at par on April 25, 2018, was purchased on June 25, 2009, at 94.125. What was the approximate yield rate?

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Question 15

A $125 000 bond, redeemable at par in three years with 7.5% coupons payable quarterly, is bought to yield 6% compounded quarterly.
(i)Compute the premium or discount and the purchase price.
(ii)Construct a schedule for amortization of premium.

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Question 16

Bonds in denominations of $100 000 redeemable at 104 are offered for sale. If the bonds mature in ten years and six months and the coupon rate is 5.5% payable quarterly, what is the market price of the bonds to yield 7.2% compounded quarterly?

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Question 17

What is the amount of premium/discount amortized or accumulated in the first payment interval for a bond that has a face value of $6000 and it sold for $5700? The coupon rate is 9% compounded semi-annually and the market rate is 10.1% compounded semi-annually.

Accepted Answer

A) $18.75 
B) $17.85 
C) $11.85 
D) $15.75 
E) $14.75

Question 18

A $100 000.00, 7.2% bond with quarterly coupons redeemable at par is purchased 11 years before maturity to yield 6% compounded semi-annually. Determine the premium or discount.

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Question 19

A $100 000, 7.5% bond with semi-annual coupons redeemable at 106 is bought three years before maturity to yield 8% compounded semi-annually. What is the purchase price?

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Question 20

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.

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Exam 15: Bond Valuation