Questions from Business Mathematics

Q: Bonds J, K, and L all have a face value

Bonds J, K, and L all have a face value of $1000 and all have 20 years remaining until maturity. Their respective coupon rates are 6%, 7%, and 8%. Calculate their market prices if the rate of return r...

Q: Bonds M, N, and Q all have a face value

Bonds M, N, and Q all have a face value of $1000 and all have 20 years remaining until maturity. Their respective coupon rates are 7%, 6%, and 5%. Calculate their market prices if the rate of return r...

Q: Evaluate values of the variables. Calculate the result accurate to the

Evaluate values of the variables. Calculate the result accurate to the nearest cent. N 1 – d for N = $89.10, d = 0.10

Q: A $1000, 7% coupon bond has 15 years remaining

A $1000, 7% coupon bond has 15 years remaining until maturity. The rate of return required by the market on these bonds has recently been 7% (compounded semiannually). Calculate the price change if th...

Q: This problem investigates the sensitivity of the prices of bonds carrying differing

This problem investigates the sensitivity of the prices of bonds carrying differing coupon rates to interest rate changes. Bonds K and L both have a face value of $1000 and 15 years remaining until ma...

Q: Three years after the issue of a $10,000,

Three years after the issue of a $10,000, 6.5% coupon, 25-year bond, the rate of return required in the bond market on long-term bonds is 5.6% compounded semiannually. 1. At what price would the bond...

Q: Four and one-half years ago Gavin purchased a $25

Four and one-half years ago Gavin purchased a $25,000 bond in a new Province of Ontario issue with a 20-year maturity and a 6.1% coupon. If the prevailing market rate is now 7.1% compounded semiannual...

Q: Three years ago Quebec Hydro sold an issue of 20-year

Three years ago Quebec Hydro sold an issue of 20-year, 6.5% coupon bonds. Calculate an investor’s percent capital gain for the entire three-year holding period if the current semiannually compounded r...

Q: Two and one-half years ago the Province of Saskatchewan sold

Two and one-half years ago the Province of Saskatchewan sold an issue of 25-year, 6% coupon bonds. Calculate an investor’s percent capital gain for the entire 2 1 2 -year holding period if the current...

Q: During periods of declining interest rates, long-term bonds can

During periods of declining interest rates, long-term bonds can provide investors with impressive capital gains. An extraordinary example occurred in the early 1980s. In September 1981, the bond marke...