a) A $1800 corporate bond earning 8% compounded annually for 3.5 years b) A $1800 corporate bond earning 3.5% compounded annually for 8 years Oc) A $1800 corporate bond earning 3.5% simple interest annually for 8 years d) A $1800 corporate bond earning 0.35% compounded annually for 8 years
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- A $200,000 bond having a bond rate of 8% payable annually is purchased for $190,500 and kept for 6 years, at which time it is sold. How much should it sell for in order to yield a 7% effective annual return on the investment? a. $168,000 b. $171,000 c. $174,000 d. $177,000.A) You invest OMR 900 in a bond which gives 9% interest over a period of 2 years, the compounding is done quarterly. How much will be the value of the investment? Select one: a. 1053.24 b. 1254.74 c. 1075.34 d. 753.24 B) Which of the statements are not correct Select one: a. Profits refers to earnings before Interest and Taxes b. Investment decisions relate to pattern of financing c. Dividend pay out ratio refers to what proportion is paid to shareholders d. Borrowed funds are relatively cheaper than shareholders’ funds3. Assume you purchased a bond for $9,186. The bond pays $300 interest every six months. You sell the bond after 18 months for $10,000. Calculate the following: a. Income. b. Capital gain (or loss). c. Total return in dollars and as a percentage of the original investment. Review Only Click the icon to see the Worked Solution. a. The current income is $ (Round to the nearest dollar.) b. The capital gain (or loss) is $ (Enter a loss as a negative number and round to the nearest dollar.) c. The total return in dollars is $ (Round to the nearest dollar.) The total return as a percentage of the original investment is %. (Enter as a percentage and round to two decimal places.)
- Bonds Valuation and Yield I. Two types of bonds are offered to you for bond investment considerations: P10,000, 5-year, 10% p.a. Debenture bond issued by Let's Go corp. The interest payable twice a year. The bond has four years remaining term and is offered to you at 98-1/2. □ P5,000, 10-year, 10% p.a. Mortgage bond issued by Let's Go corp. Interest is paid annually. The bond has still 7 years remaining life before its maturity. It is offered to you by a fried at 101-3/4. □ It has been your policy that your desired rate of return for unsecured investment should be 12% p,a, and for secured investment will earn a minimum of 8% p.a. Based on the above information, you would like to know the following: a. The value of the bond for the two types of bond offered. b. The exact yield to maturity (YTM) of the two bonds offered. c. Which bond you wish to invest? Why?You're considering an investment in 10-year, $1,000 face value bonds that pay 8.50% annually and sell for $1,033.55. If you do make the purchase, how much will you earn? Select one: O a. 8.00% O b. 8.50% Oc. 7.59% Od 8.25% Oe. 8.86% Clear my choice AA $12 000, 8.9% bond is purchased 7 years before maturity to yield 5.8% compounded semi- annually. The bond interest is payable semi-annually. What is the amount of the premium or discount? O a. $2115.46 O b. $10579.09 O c. $1420.91 O d. $14115.46
- What is the present value of the principal amount (face value) based on the following example. 10% five-year bond, par 100, with an 11% discount rate. A $4.74 B $58.54 C) $94.79 D $61.76Q1 A corporate bond that you own at the beginning of the year is worth $975. During the year, it pays $35 in interest payments and ends the year valued at $965.What was your dollar return and percent return? (Round "Percent return" answer to 2 decimal places.) DOLLAR RETURN PERCENT RETURN. %A $5000 bond bearing interest at 3.4% payable semi-annually is due in 12 years. Money is worth 8.0% compounded semi-annually. What is the bond rate? a. 8.0% compounded semi-annually b. 3.4% payable semi-annually
- Wells Fargo Bank of General Goldman Company AT&T Verizon America Electric Sachs Time to Maturity (years) 10 10 2 3 8. 7 Annual 2.40 4.00 4.25 7.15 4.15 3.50 Rate (%) If the General Electric bonds you purchased had paid you a total of $8,680 at maturity, how much did you originally invest? (Round your answer to the nearest dollar.) $ Submit AnswerHow much would you be prepared to pay for a $1,000 bond which comes due in 8 years and pays $100 interest annually assuming your required rate of return is 12% (pick closest answer)? a. $901 b. $1,032 c. $1,007 d. $962Question 4: Investments Please note that this question has two independent parts. Part 1: On January 1, 2020, Hamilton Financial (HF) purchased a six-year, $150,000 bond from Think Plane Company for $128,551. The bond offers a 4% coupon rate and pays coupons annually on December 31 of each year. At the time of the purchase of this bond, the market rate on comparable securities was 7%. HF will use the following amortization table for this bond (numbers have been rounded to the nearest decimal, small rounding differences of up to $1 might occur): Difference Beginning Ending (FV-BV) Date Balance Coupon Interest Balance Fair Value 1/1/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2026 0.00 2700 -400 128,551 128,551 128,551 6,000 8,999 131,549 6,000 9,208 134,758 6,000 9,433 138,191 6,000 9,673 141,864 6,000 9,930 145,794 6,000 10,206 131,549 134,758 134,249 134,358 138,191 141,864 145,794 150,000 HF included this security in its portfolio of Available for Sale (AFS)…