Questions from General Investment

Q: Buck buys a 7.5% corporate bond with a current

Buck buys a 7.5% corporate bond with a current yield of 4.8%. How much did he pay for the bond?

Q: An investor is in the 24% tax bracket and lives in

An investor is in the 24% tax bracket and lives in a state with no income tax. He is trying to decide which of two bonds to purchase. One is a 7% corporate bond that is selling at par. The other is a...

Q: An investor lives in a state with a 3% income tax

An investor lives in a state with a 3% income tax rate. Her federal income tax bracket is 35%. She wants to invest in one of two bonds that are similar in terms of risk (and both bonds currently sell...

Q: An investor short sells 75 shares of a stock for $69

An investor short sells 75 shares of a stock for $69 per share. The initial margin is 60%, and the maintenance margin is 40%. The price of the stock falls to $57 per share. What is the margin, and wil...

Q: Janice Wilcox is a wealthy investor who’s looking for a tax shelter

Janice Wilcox is a wealthy investor who’s looking for a tax shelter. Janice is in the maximum (37%) federal tax bracket and lives in a state with a very high state income tax. (She pays the maximum of...

Q: Jake Baldwin is looking for a fixed-income investment. He

Jake Baldwin is looking for a fixed-income investment. He is considering two bond issues: a. A Treasury with a yield of 5.5% b. An in-state municipal bond with a yield of 3.8% Jake is in the 32% feder...

Q: Which of the following bonds offers the highest current yield?

Which of the following bonds offers the highest current yield? a. A 12%, 19-year bond quoted at 135 b. A 5.6%, 28-year bond quoted at 63 c. An 8%, 23-year bond quoted at 90

Q: Assume that you pay $825 for a long-term bond

Assume that you pay $825 for a long-term bond that carries a 8% coupon. Over the course of the next 12 months, interest rates drop sharply. As a result, you sell the bond at a price of $952.25. a. Fin...

Q: A firm wishing to evaluate interest rate behavior has gathered yield data

A firm wishing to evaluate interest rate behavior has gathered yield data on five U.S. Treasury securities, each having a different maturity and all measured at the same point in time. The summarized...

Q: Three years ago you purchased a 10% coupon bond that pays

Three years ago you purchased a 10% coupon bond that pays semiannual coupon payments for $975. What would be your bond equivalent yield if you sold the bond for its current market price of $1,050?