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 sell? 2. What capital gain or loss (expressed as a percentage of the original investment) would the owner realize by selling the bond at that price?
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = April 1, 2013 Maturity date = April 1, 2037 Purchase date = June 20, 2015 Coupon rate = 5.4 Market rate = 6.1
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Dec 1, 2012 Maturity date = Dec 1, 2032 Purchase date = Mar 25, 2014 Coupon rate = 5.2 Market rate = 5.7
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = July 1, 2012 Maturity date = July 1, 2032 Purchase date = April 9, 2013 Coupon rate = 4.3 Market rate = 5.5
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Aug 1, 2015 Maturity date = Aug 1, 2035 Purchase date = Dec 15, 2019 Coupon rate = 6.1 Market rate = 4.9
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Sept 20, 2008 Maturity date = Sept 20, 2028 Purchase date = June 1, 2011 Coupon rate = 5.0 Market rate = 5.8
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Jan 1, 2006 Maturity date = Jan 1, 2021 Purchase date = April 15, 2006 Coupon rate = 4.0 Market rate = 4.5
> A $5000, 7% coupon, 20-year bond issued on January 21, 2015, was purchased on January 25, 2016, to yield 6.5% to maturity, and then sold on January 13, 2017, to yield the purchaser 5.2% to maturity. What was the investor’s capital gain or loss: 1. In dol
> A $10,000, 14% coupon, 25-year bond issued on June 15, 2014, was purchased on March 20, 2017, to yield 9% to maturity, and then sold on April 20, 2020, to yield the purchaser 11.5% to maturity. What was the investor’s capital gain or loss: 1. In dollars?
> Evaluate expressions to six-figure accuracy. 84/3
> Using the bond price given in the second-to-last column of Table, verify the April 15, 2019, yield (to maturity) for the Ontario Hydro 8.90% coupon bond maturing August 18, 2020.
> Using the bond yield given in the final column of Table, verify the April 15, 2019, quoted price for the Province of British Columbia 3.70% coupon bond maturing December 18, 2020.
> Using the bond yield given in the final column of Table, verify the April 15, 2019, quoted price for the Province of Ontario 1.35% coupon bond maturing March 8, 2022.
> Page 592 Using the bond yield given in the final column of Table, verify the April 15, 2019, quoted price for the Province of New Brunswick 2.85% coupon bond maturing June 2, 2023.
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = March 15, 2002 Maturity date = March 15, 2027 Purchase date = Oct 5, 2008 Coupon rate = 5.5 Market rate = 6.0
> Calculate the quoted price on June 1, 2011 of the bond described in Problem 4. Data from Problem 4: Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Sept 20, 2008 Maturity date = Sept 20, 2028 Purchase date = June 1, 2011 Coup
> Calculate the quoted price on April 15, 2006 of the bond described in Problem 3. Data from Problem 3: Calculate the purchase price (flat) of $1000 face value bonds. Issue date = Jan 1, 2006 Maturity date = Jan 1, 2021 Purchase date = April 15, 2006 Coup
> If a broker quotes a price of 108.50 for a bond on October 23, what amount will a client pay per $1000 face value? The 7.2% coupon rate is payable on March 1 and September 1 of each year. The relevant February has 28 days.
> A $5000 bond was sold for $4860 (flat) on September 17. If the bond pays $200 interest on June 1 and December 1 of each year, what price (expressed as a percentage of face value) would have been quoted for bonds of this issue on September 17?
> A $1000 face value, 7.6% coupon bond pays interest on May 15 and November 15. If its flat price on August 1 was $1065.50, at what price (expressed as a percentage of face value) would the issue have been reported in the financial pages?
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. S 1 + r t for S = $2500, r = 0.085, t = 123 365
> A $1000, 7% coupon, 15-year Province of Saskatchewan bond was issued on May 20, 2017. Calculate its (flat) price on May 20, June 20, July 20, August 20, September 20, October 20, and November 20, 2019, if the yield to maturity on every date was 5.9% comp
> A $1000, 5.2% coupon, 20-year Province of Ontario bond was issued on March 15, 2019. Calculate its flat price on March 15, April 15, May 15, June 15, July 15, August 15, and September 15, 2020, if the yield to maturity on every date was 6% compounded sem
> A $1000, 6.75% coupon, 25-year Government of Canada bond was issued on March 15, 1971. At what flat price did it trade on July 4, 1981, when the market’s required return was 17% compounded semiannually?
> A $1000, 10% coupon bond issued by Ontario Hydro on July 15, 2011 matures on July 15, 2036. What was its flat price on June 1, 2020 when the required yield to maturity was 5.5% compounded semiannually?
> A $1000, 6% coupon, 25-year Government of Canada bond was issued on June 1, 2015. At what flat price did it sell on April 27, 2019 if the market’s required return was 4.6% compounded semiannually?
> Calculate the purchase price (flat) of $1000 face value bonds. Issue date = June 1, 2010 Maturity date = June 1, 2030 Purchase date = June 15, 2019 Coupon rate = 8.0 Market rate = 5.25
> In the spring of 1992 it became apparent that Olympia & York (O&Y) would have serious difficulty in servicing its debt. Because of this risk, investors were heavily discounting O&Y’s bond issues. On April 30, 1992 an Olympia & York bond issue, paying an
> A $10,000 Nova Chemicals Corp. bond carrying an 8% coupon is currently priced to yield 7% compounded semiannually until maturity. If the bond price abruptly falls by $250, what is the change in the yield to maturity if the bond has: 1. 2 years remaining
> A $5000 Government of Canada bond carrying a 6% coupon is currently priced to yield 6% compounded semiannually until maturity. If the bond price abruptly rises by $100, what is the change in the yield to maturity if the bond has: 1. 3 years remaining to
> Bonds D and E both have a face value of $1000 and pay a coupon rate of 7%. They have 5 and 20 years, respectively, remaining until maturity. Calculate the yield to maturity of each bond if it is purchased for $1050.
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. P(1 + rt) for P = $770, r = 0.013, t = 223 365
> Bonds A and C both have a face value of $1000 and pay a coupon rate of 6.5%. They have 5 and 20 years, respectively, remaining until maturity. Calculate the yield to maturity of each bond if it is purchased for $950.
> Pina bought a 6% coupon, $20,000 face value corporate bond for $21,000 when it had 10 years remaining until maturity. What are her nominal and effective yields to maturity on the bond?
> Manuel bought a $100,000 bond with a 4% coupon for $92,300 when it had five years remaining to maturity. What was the prevailing market rate at the time Manuel purchased the bond?
> A bond with a face value of $1000 and 15 years remaining until maturity pays a coupon rate of 10%. Calculate its yield to maturity if it is priced at $1250.
> A bond with a face value of $1000 and 15 years remaining until maturity pays a coupon rate of 5%. Calculate its yield to maturity if it is priced at $900.
> Denis purchased a $10,000 face value Ontario Hydro Energy bond maturing in five years. The coupon rate was 6.5% payable semiannually. If the prevailing market rate at the time of purchase was 5.8% compounded semiannually, what price did Denis pay for the
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = Oct 31, 2002 Maturity date = Oct 31, 2027 Purchase date = Apr 30, 2019 Coupon rate (%) = 16.0 Market rate (%) = 5.7
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = Mar 15, 2007 Maturity date = Mar 15, 2032 Purchase date = Sept 15, 2011 Coupon rate (%) = 8.8 Market rate (%) = 17.0
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = Jan 31, 2009 Maturity date = Jan 31, 2039 Purchase date = July 31, 2011 Coupon rate (%) = 5.1 Market rate (%) = 6.0
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = May 15, 2010 Maturity date = May 15, 2030 Purchase date = Nov 15, 2016 Coupon rate (%) = 6.0 Market rate (%) = 4.0
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. L(1 – d1)(1 – d2)(1 – d3) for L = $490, d1 = 0.125, d2 = 0.15, d3 = 0.05
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = Jan 1, 2007 Maturity date = Jan 1, 2027 Purchase date = July 1, 2015 Coupon rate (%) = 7.3 Market rate (%) = 3.8
> The downside of the long-term bond investment story occurs during periods of rising long-term interest rates, when bond prices fall. During the two years preceding September 1981, the market rate of return on long-term bonds rose from 11% to 18.5% compou
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = Dec 15, 1998 Maturity date = Dec 15. 2023 Purchase date = June 15, 2001 Coupon rate (%) = 4.75 Market rate (%) = 5.9
> 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 market was pricing long-term bonds to provide a rate of ret
> 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 rate of return required in the bond market is: 1. 6.5
> 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 return required in the bond market is: 1. 5.5%. 2. 6.5%
> 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 semiannually: 1. What would be the proceeds from the sale of Gav
> 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 maturity. Their coupon rates are 6% and 8%, respectively
> 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 the required return abruptly: 1. Rises to 8%. 2. Rises t
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. N 1 – d for N = $89.10, d = 0.10
> 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 required by the market on these bonds is 8% compounded
> 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 required by the market on these bonds is 5% compounded
> Bonds E, F, G, and H all have a face value of $1000 and carry a 7% coupon. The time remaining until maturity is 5, 10, 15, and 25 years for E, F, G, and H, respectively. Calculate their market prices if the rate of return required by the market on these
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = June 15, 2005 Maturity date = June 15, 2030 Purchase date = Dec 15, 2011 Coupon rate (%) = 5.0 Market rate (%) = 6.0
> Bonds A, B, C, and D all have a face value of $1000 and carry a 7% coupon. The time remaining until maturity is 5, 10, 15, and 25 years for A, B, C, and D, respectively. Calculate their market prices if the rate of return required by the market on these
> Bond C and Bond D both have a face value of $1000, and each carries a 4.2% coupon. Bond C matures in 3 years and Bond B matures in 23 years. If the prevailing required rate of return in the bond market suddenly rises from the current 4.5% to 4.8% compoun
> Bond A and Bond B both have a face value of $1000, each carries a 5% coupon, and both are currently priced at par in the bond market. Bond A matures in 2 years and Bond B matures in 10 years. If the prevailing required rate of return in the bond market s
> Eight years ago, Yan purchased a $20,000 face value, 6% coupon bond with 15 years remaining to maturity. The prevailing market rate of return at the time was 7.2% compounded semiannually; now it is 4.9% compounded semiannually. How much more or less is t
> A $25,000, 6.25% coupon bond has 21 1 2 years remaining until maturity. Calculate the bond premium if the required return in the bond market is 5.2% compounded semiannually.
> A $5000, 5.75% coupon bond has 16 years remaining until maturity. Calculate the bond discount if the required return in the bond market is 6.5% compounded semiannually.
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. I r t for r = 0.095, I = $23.21, t = 283 365
> A $1000, 5.5% coupon bond has 8 1 2 years remaining until maturity. Calculate the bond discount if the required return in the bond market is 6.3% compounded semiannually.
> A $1000, 6.5% coupon bond has 13 1 2 years remaining until maturity. Calculate the bond premium if the required return in the bond market is 5.5% compounded semiannually.
> Bernard purchased a $50,000 bond carrying a 4.5% coupon rate when it had 8 years remaining until maturity. What price did he pay if the prevailing rate of return on the purchase date was 5.2% compounded semiannually?
> Calculate the purchase price of each of the $1000 face value bonds. Issue date = June 1, 2010 Maturity date = June 1, 2030 Purchase date = June 1, 2016 Coupon rate (%) = 5.75 Market rate (%) = 4.5
> The interest rate for the first three years of an $80,000 mortgage loan is 7.4% compounded semiannually. Monthly payments are calculated using a 25-year amortization. 1. What will be the principal balance at the end of the three-year term? 2. What will b
> The Melnyks are nearing the end of the first three-year term of a $100,000 mortgage loan with a 20-year amortization. The interest rate has been 7.7% compounded semiannually for the initial term. How much will their monthly payments decrease if the inter
> The Switzers are nearing the end of the first five-year term of a $100,000 mortgage loan with a 25-year amortization. The interest rate has been 6.5% compounded semiannually for Page 560 the initial term. How much will their monthly payments decrease if
> A $100,000 mortgage loan at 7.6% compounded semiannually has a 25-year amortization period. 1. Calculate the monthly payment. 2. If the interest rate were 1% lower (that is, 6.6% compounded semiannually), what loan amount would result in the same monthly
> The Tarkanians can afford a maximum mortgage payment of $1000 per month. What is the maximum mortgage loan they can afford if the amortization period is 25 years and the interest rate is: 1. 4.5% compounded semiannually? 2. 7.5% compounded semiannually?
> The Graftons can afford a maximum mortgage payment of $1000 per month. The current interest rate is 7.2% compounded semiannually. What is the maximum mortgage loan they can afford if the amortization period is: 1. 15 years? 2. 20 years? 3. 25 years?
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. I ÷ Pr for P = $500, I = $13.75, r = 0.11
> A marketing innovation is the “cash-back mortgage” wherein the lender gives the borrower an up-front bonus cash payment. For example, if you borrow $100,000 on a 3% cash-back mortgage loan, the lender will give you $3000 in addition to the $100,000 loan.
> The monthly payments on the Wolskis’ $266,000 mortgage were originally based on a 25-year amortization and an interest rate of 4.5% compounded semiannually for a five-year term. After two years, they elected to increase their monthly payments by $150, an
> The MacLellans originally chose to make payments of $1600 per month on a $138,000 mortgage written at 7.4% compounded semiannually for the first five years. After three years they exercised their right under the mortgage contract to increase the payments
> After three years of the first five-year term at 6.3% compounded semiannually, Dean and Cindy decide to take advantage of the privilege of increasing the payments on their $200,000 mortgage loan by 10%. The monthly payments were originally calculated for
> A $130,000 mortgage loan at 7.2% compounded monthly has a 25-year amortization. 1. What prepayment at the end of the first year will reduce the time required to pay off the loan by one year? (Assume the final payment equals the others.) 2. Instead of the
> A $100,000 mortgage loan has a 25-year amortization. 1. Calculate the monthly payment at interest rates of 4%, 6%, and 8% compounded semiannually. 2. By what percentage does the monthly payment on the 8% mortgage exceed the monthly payment on the 4% mort
> The interest rate for the first five years of a $120,000 mortgage is 4.15% compounded semiannually. Monthly payments are based on a 25-year amortization. If a $5000 prepayment is made at the end of the second year: 1. How much will the amortization perio
> Monthly payments on a $150,000 mortgage are based on an interest rate of 6.6% compounded semiannually and a 20-year amortization. If a $5000 prepayment is made along with the 32nd payment: 1. How much will the amortization period be shortened? 2. What wi
> A $100,000 mortgage at 3.8% compounded semiannually with a 25-year amortization requires monthly payments. How much will the amortization period be shortened if payments are increased by 10% starting in the second year, and a $10,000 lump payment is made
> A $100,000 mortgage at 7.1% compounded semiannually with a 20-year amortization requires monthly payments. How much will the amortization period be shortened if a $10,000 lump payment is made along with the 12th payment and payments are increased by 10%
> Evaluate values of the variables. Calculate the result accurate to the nearest cent. 7x(4y – $8) for x = $3.20, y = $1.50
> A $100,000 mortgage at 4.3% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to miss a payment once each year. How much will the amortization period be lengthened if the borrower misses the 1
> A $100,000 mortgage at 6.75% compounded semiannually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to miss a payment once each year. How much will the amortization period be lengthened if the borrower misses the
> A $100,000 mortgage at 6.8% compounded semiannually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to “double up” on a payment once each year. How much will the amortization period be shortened if the borrower dou
> A $100,000 mortgage at 6.2% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to “double up” on a payment once each year. How much will the amortization period be shortened if the borrower dou
> A $100,000 mortgage at 4.9% compounded semiannually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to increase the amount of the regular payment by up to 10% once each year. How much will the amortization period b
> A $100,000 mortgage at 6.9% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage entitles the borrower to increase the amount of the regular payment by up to 15% once each year. How much will the amortization period
> The interest rate on a $100,000 mortgage loan is 7% compounded semiannually. 1. Calculate the monthly payment for each of 15-year, 20-year, and 25-year amortizations. 2. By what percentage must the monthly payment be increased for a 20-year amortization
> A $200,000 mortgage at 6.6% compounded semiannually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to prepay up to 10% of the original principal once each year. How much will the amortization period be shortened i
> A $200,000 mortgage at 6.6% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to prepay up to 10% of the original principal once each year. How much will the amortization period be shortened i
> The interest rate on a $100,000 mortgage loan is 4% compounded semiannually. 1. What are the monthly payments for a 25-year amortization? 2. Suppose that the borrower instead makes weekly payments equal to one-fourth of the monthly payment calculated in
> Evaluate expression for the given values of the variables. Calculate the result accurate to the nearest cent. P ( 1 + r t 1 ) + S 1 + r t 2 for P = $470, S = $390, r = 0.075, t 1 = 104 365 , t 2 = 73 365
> Repeat Problem 1 with the change that Vencap’s cost of capital is 8%. Data from Problem 1: Vencap Enterprises is evaluating an investment opportunity that can be purchased for $55,000. Further product development will require contributions of $30,000 in
> Marge and Homer Sampson have saved $95,000 toward the purchase of their first home. Allowing $7000 for legal costs and moving expenses, they have $88,000 available for a down payment. Their bank uses 32% for the GDS ratio and 40% for the TDS ratio. 1. Ba
> The Archibalds are eligible for CMHC mortgage loan insurance. Consequently, their limits are 95% for the loan-to-value ratio, 32% for the GDS ratio, and 40% for the TDS ratio. 1. Rounded to the nearest $100, what is the maximum 25-year mortgage loan for
> The Delgados have a gross monthly income of $6000. Monthly payments on personal loans total $500. Their bank limits the gross debt service ratio at 33% and the total debt service ratio at 42%. 1. Rounded to the nearest $100, what is the maximum 25-year m
