Question: A bond has a face value of $1,000, is redeemable in eight years, and pays interest of $100 at the end of each of the

A bond has a of $1,000, is redeemable in eight years, and pays interest of $100 at the end of each of the eight years. If the bond can be purchased for $981, what is the rate of return if the bond is held until maturity?
(a) 10.65%
(b) 12.65%
(c) 10.35%
(d) 11.65%

Step by Step Solution

★★★★★

3.46 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Select c V N CP FiN rZ P AiN 981 N 8 periods r 10 per ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

929-B-F-R-A (742).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

Draw a scatter diagram of the inflation rate and the interest rate. Describe the relationship. The spreadsheet provides the economic data: Column A is the year, column B is the inflation rate, column...

A convertible bond has a face value of $1,000, and the conversion price is $50 per share. The stock is selling at $42 per share. The bond pays $60 per year interest and is selling in the market for...

A 30-year bond has a face value of $1,000 and a coupon rate of 6% per year, interest payments are paid semiannually. If the maturity from now is exactly 10 years and the current market rate for the...

a. A taxpayer is considering buying a fully taxable corporate bond. The bond has a remaining maturity of 5 years, promises to pay 6% interest annually (assume the coupon interest is payable...

INVES TO R BULLETIN What Are Corporate Bonds? The SECs Oice offnuestor Education undAdvocucy is issuing dais Investor Bulletin to 01%?" basic inrmurion uour corpamte imnds. What is a corporate bond?...

please help with these questions QUESTION #4 der the same data as in question 3 and now assume that the required annual yield-to-maturity of the bond, denoted by k, will change with X as follows:...

(a) A city is spending $10 million on building a new sewage system. Suppose the annual operating expenses for the system are projected to be $6,000 for each year, starting in year one and continuing...

A city is spending $10 million on building a new sewage system. Suppose the annual operating expenses for the system are projected to be $6,000 for each year, starting in year one and continuing...

Which one of the following is FALSE? Select one: a.The longer time to maturity, the higher interest rate risk. b.The higher coupon rate, the lower interest rate risk. c.The bond price and the...

Question 3 Part A (5 marks) Suppose that zero interest rates with continuous compounding are as follows. Maturity (years) Rate (% p.a.) 1 4 4.6 3 8 i) Estimate the price of a bond with a face value...

Cagney purchased a bond on January 1, 2018, for $150,000. The bond has a face value of $150,000 and matures in 10 years. The bond pays interest on June 30 and December 31 at a 4% annual rate. Cagney...

1. Create a list of at least five environmental management practices and methodologies that may be adopted in the building and construction industry? 2. Create a list of five legal and regulatory...

At the beginning of the year, you bought a $ 1,000 par value corporate bond with a 6 percent annual coupon rate and a 10- year maturity date. When you bought the bond, it had an expected yield to...

Question 2 4 ( Bonus ) ( 2 points ) Listen BONUS ( 2 points possible total ) : The position of a particle is given by the function s ( t ) = s i n ( 5 t ) c o s ( 4 t ) where s is measured in meters...

For each of the strategies listed below, identify a hypothetical strategy that you believe may be good for Petronas to pursue. talking about all the 11 strategies. 1. Forward Integration 2. Backward...

Find the center of mass of the lamina that has the given shape and density. y = V3x, y = 0, x = 4; p(r, 0) = 2 (X, y) =

26. Suppose we draw the consumption function for a two-sector 2 points economy, with disposable income, Yd, on the horizontal axis and planned consumption, C, on the vertical axis. Suppose we also...

Fairchild Centre is an NFPO funded by government grants and private donations. It was established on January 1, Year 5, to provide counselling services and a drop-in centre for single parents. On...

27. GDP at market prices in an economy one year is K1,500 billion. Net income from abroad is K20 billion, net current transfers paid abroad are K15 billion, and capital consumption is K150 billion....

A project manager is in the process of documenting how the team will be acquired, managed, and then released. The project manager is performing a process from which Knowledge Area? A. Project...

The Parks and Recreation Department of Burkett County has estimated that the initial cost of a "bare-bones" permanent river park will be $2.3 million. Annual upkeep costs are estimated at $120,000....

From the following data, calculate the (a) Conventional (b) Modified benefit/cost ratios using an interest rate of 6% per year and an infinite projectperiod. To the People To the Government Benefit...

In 2010, Brazil began construction of the Belo Monte hydroelectric dam on the Xingu River (which feeds the Amazon River). The project is funded by a consortium of investors and is expected to cost...

Stackhouse Industries has a new project available that requires an initial investment of $4.5 million. The project will provide unlevered cash flows of $675,000 per year for the next 20 years. The...

14.1. Winview Clinic is evaluating a project that costs $52,125 and has expected net cash inflows of $12,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the...

Please help me with this problem, thank you!!! 2. (20 pts) Lett = (1,2,3,4,5) ES . Find a permutation o E S, such that oto 1 = (1,4,3,2,5)