of its 10%‚ $1‚000 bonds at 99 plus accrued interest. The bonds are dated April 1‚ 2012 and mature on April 1‚ 2022. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance? a. $3‚045‚000 b. $3‚000‚000 c. $2‚970‚000 d. $2‚895‚000 2. On January 1‚ 2012‚ Solis Co. issued its 10% bonds in the face amount of $4‚000‚000‚ which mature on January 1‚ 2022. The bonds were issued for $4‚540‚000 to yield 8%‚ resulting in bond premium of $540‚000
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Chapter 7 Test Review Problem 7-1 Bond valuation Callaghan Motors’ bonds have 5 years remaining to maturity. Interest is paid annually‚ they have a $1‚000 par value‚ the coupon interest rate is 6.5%‚ and the yield to maturity is 11%. What is the bond’s current market price? Round your answer to the nearest cent. Annual Interest Payment = Par Value * Coupon Rate $1‚000 * 6.5%= 65 Financial Calculator N= 5 I/YR= 11% PMT= -65 FV= -$1‚000 Find PV? Bond’s Current Market Price= 833.68 Problem7-2
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followed by answers.) 1. What is the cash flow of a 8-year bond that pays coupon interest semiannually‚ has a coupon rate of 6%‚ and has a par value of $100‚000? The principal or par value of a bond is the amount that the issuer agrees to repay the bondholder at the maturity date. The coupon rate multiplied by the principal of the bond provides the dollar amount of the coupon (or annual amount of the interest payment). An 8-year bond with a 6% annual coupon rate and a principal of $100‚000 will
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is the difference between Islamic bonds and conventional bonds? Back to Top Islamic bonds are similar to conventional bonds in Malaysia. It always has fix term maturity‚ can bear a coupon‚ and trades on the normal yield price relationship (see attached appendix II on calculation method). For conventional investors‚ the structuring of the bonds by the issuer is immaterial. The difference lies only in the way the issuer structure the bonds. An Islamic bonds is structured such that the issuance
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is the yield to maturity of a bond? The YTM is the discount rate that equates the cash flows to the price. It is the “promised yield” from holding the bond IF the bond is held to maturity and the coupons are reinvested at the YTM. 4. What is the yield to maturity calculated on a bond-equivalent basis? Bond equivalent basis or Bond Equivalent Yield (BEY) is the common way to quote YTM. It is double the period rate. Therefore BEY is a semi-annual APR. 5. Each bond shown in the table below has a
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interest payment for the following three bonds: 3 ½ percent coupon corporate bond (paid semiannually)‚ 4.25 percent coupon Treasury note‚ and a corporate zero coupon bond maturing in ten years. (Assume a $1000 par value.) 3 ½ percent coupon corporate bond (paid semi-annually): ½ × 3.5% × $1‚000 = $17.50 4.25 percent coupon Treasury note: ½ × 4.25% × $1‚000 = $21.25 corporate zero coupon bond maturing in 10 years: 0% × $1‚000 = $0 7-3. A bond issued by Ford on May 15‚ 1997‚ is scheduled
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answer all of them. The last question is on page 11. Formulae FV ( PV(1 ( r ( m)n. FVA ( PMT EMBED Equation.3 . PVA ( PMT EMBED Equation.3 . V0 ( EMBED Equation.3 . Where EMBED Equation.3 is the yield-to-maturity (YTM) of nth year zero-coupon bond and y is YTM. YTM ( EMBED Equation.3 . EMBED Equation.3 Long questions Please show all steps for full credits. 1. HKBU Investment just hires Peter in its IPO division. Peter is asked to calculate the fair value of the stock of Orange Computer
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Benchmark Bond Offering Case Belgacom The Inaugural Institutional Benchmark Bond Offering Alizée Hardy Orea Lika Rossella Miccolis Yasmine Nouri Margaux Vandenbossche For Lecturer Yassine Boudghene Assistant Quentin Bodart Case context § In 2006 Belgacom acquisition of the remaining 25% stake in Proximus that Vodafone owned. § Consideration was EUR 2bn § Financed by cash and EUR 1.8bn “1y bridge loan facility” § The debt is taken out by issuing bond § First bond offering
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Briefly explain why many corporations prefer to issue callable long-term corporate bonds rather than non-callable long-term bonds. There are three main reasons why a corporation may be interested in calling a bond. * Interest rates have fallen‚ so they can refinance at a lower rate. * Credit quality has improved‚ so they can refinance at a lower rate. * Assets have been sold‚ so money is available to pay off debt. If a bond issuer pays investors the going rate of 7% annually in interest‚ and then the
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factors to desistance such as Social Control Theory‚ also known as Social Bond theory. According to the Social Bond Theory‚ the bond between individual and the people around them are important in the support of preventing and controlling the individual from reoffending (Hirschi‚ 1969). There are 4 factors in the social bond theory which are; attachment‚ commitment‚ belief and involvement (Vold et al.‚ 2002). Attachment is the bond between the individual and the people around such as family and friends
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