Question 1

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.

Accepted Answer

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Question 2

Bonds in denominations of $10 000 redeemable at par in six years and four months are offered for sale. If the coupon rate is 6.5% payable quarterly and the expected yield is 8% compounded quarterly, determine
a) the market price;
b) the accrued interest;
c) the cash price.

Accepted Answer

The answer of Bonds in denominations of $10 000 redeemable...

Question 3

Clarington issued 15 year bonds in the amount of $500 000. Interest on the bonds is 2.2% payable annually. What is the issue price of the bonds, if the bonds are sold to yield 2.8% compounded quarterly?

Accepted Answer

A)  $329 004 
B)  $132 950 
C)  $461 954 
D)  $330 425 
E)  $343 749

Question 4

Find the gain or loss on the sale without constructing a bond schedule for six $3500, 3.5% bonds with interest payable semi-annually redeemable at par bought twenty-one years before maturity to yield 5.5% compounded semi-annually. The bonds were sold three years later at 102.

Accepted Answer

A)  $5180.68 Gain 
B)  $5180.68 Loss 
C)  $5612.65 Gain 
D)  $5612.65 Loss 
E)  $5153.98 Loss

Question 5

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 6

Twenty $1 000 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?

Accepted Answer

A)  $17 969.05 
B)  $20 229.82 
C)  $20 633.46 
D)  $13 031.98 
E)  $19 861.49

Question 7

A $1000, 6% bond redeemable at par with semi-annual coupons was purchased 10 years before maturity to yield 5% compounded semi-annually. The bond was sold 3 years later at 102. Calculate the gain or loss on the sale of the bond.

Accepted Answer

A)  $38.45 Gain 
B)  $38.45 Loss 
C)  $76.48 Gain 
D)  $76.48 Loss 
E)  $58.45 Loss

Question 8

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 9

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.

Accepted Answer

The answer of A $50 000 bond bearing interest at...

Question 10

What is the amount of premium/discount for a bond that has 4 years till it matures? The face value of the bond is $100 000 and it has a bond rate of 6.4% compounded semi-annually. The bond is sold to yield 7.4% compounded semi-annually.

Accepted Answer

A)  $3084.47 
B)  $3840.47 
C)  $3048.47 
D)  $3408.47 
E)  $3184.47

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?

Accepted Answer

The answer of A $200 000, 6% bond with semi-annual...

Question 12

A $10 000 bond bearing interest at 6% payable semi-annually redeemable at par on March 1, 2002, was purchased on September 30, 1996, to yield 5% compounded semi-annually. Determine the purchase price.

Accepted Answer

The answer of A $10 000 bond bearing interest at...

Question 13

A $50 000, 6% bond with semi-annual coupons redeemable at par on April 25, 2018, was purchased on June 25, 2009, at 94.378. What was the approximate yield rate?

Accepted Answer

The answer of A $50 000, 6% bond with semi-annual...

Question 14

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.

Accepted Answer

The answer of Find the gain or loss on the...

Question 15

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?

Accepted Answer

A)  $5931.18 Gain 
B)  $5931.18 Loss 
C)  $6831.18 Gain 
D)  $6831.18 Loss 
E)  $5815.32 Loss

Question 16

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 17

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.

Accepted Answer

A)  $4513.30 
B)  $5413.30 
C)  $5431.30 
D)  $4531.30 
E)  $4533.30

Question 18

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.

Accepted Answer

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Question 19

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.

Accepted Answer

The answer of A $50 000.00, 8% bond with quarterly...

Question 20

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?

Accepted Answer

The answer of A $100 000 bond is redeemable at...

Exam 15: Bond Valuation