Show your work and ALL calculations 1. You bought a $1,000 face value Northern Company bond on
Question:
Show your work and ALL calculations
1. You bought a $1,000 face value Northern Company bond on April 1. The bond pays a coupon rate of 4%/year semiannually on December 1 and June 1. How much accrued interest did you pay?
2. Dodge & Cox manages a well-diversified speculative grade bond portfolio which is expected to have an annual default rate of 4.4% and loss given default of 60%. What is the portfolio's expected loss over the next 12 months? (Your answer should be a % carried to 2 places.)
a. If the portfolio described in #2 has a contractual coupon rate of 7.1%/year, what is its expected annual yield? (Your answer should be a % carried to 2 places.)
3. You bought a $1,000 face value Cook County, Illinois 10-year bond with equal annual amortization.
a. How much principal will you receive each year?
b. If the coupon rate is 4.2%/year, how much interest will you receive in year 1 and year 2?
4. You bought a $1,000 face value Pfizer callable bond in September 2020 that is callable at 101 in 2025 and 2026 and at par after 2026. It has a coupon rate of 4.3%/year. Excluding interest, how much would you receive if Ford called the bond in 2025
a. When is Ford likely to call the bond?
5. You bought a convertible bond issued by Spark Corp which has a conversion ratio of 25 common shares for each $1,000 bond.
a. At what stock price per share would you make a profit ("in the money") if you bought the bond at par?
b. What would you expect the bond to sell for in the market if the stock trades at $48 per share?
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson