Question: A $ 7 , 0 0 0 bond had a coupon rate of 4 . 7 5 % with interest paid semi - annually: Gabrielle

A $7,000 bond had a coupon rate of 4.75% with interest paid semi-annually: Gabrielle purchased this bond when there were 7 years left to maturity and when the market interest rate was 5.00% compounded semi-annually. She held the bond for 3 years, then sold it when the market interest rate was 4.50% compounded semi-annually.
a. What was the purchase price of the bond?
Round to the nearest cent.
b. What was the selling price of the bond?
Round to the nearest cent.
c. What was Gabrielle's gain or loss on this investment?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

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

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Current yield , dividend yield, CAPM, zero coupon DDM, DDM, bound valuations 1. Monkey company will pay a dividend of 2.00 this year, it growth rate is 5% and cost of capital 7% what is value of the...

Q:

You are trying to decide upon the purchase of 30 year bonds that have a coupon rate of 5.45% interest paid semi annually. The bonds are currently selling at par. The required rate for these bonds...

Q:

20 TABLE 19.1 Average Cumulative Default Rates (%), 1970-2013 Time (years) 1 2 3 4 5 7 10 15 0.000 0.013 0.013 0.037 0.104 0.241 0.489 0.910 1.073 0.022 0.068 0.136 0.260 0.410 0.682 1.017 1.871...

Q:

1)You have been offered to buy a stock in ABC co., ABC company has a relatively high risk level and the estimated discount rate is equal to 10%, the company used to increase the dividends by 3%...

Q:

Stock price per share Estimat ed growth rate Required rate of return ( R ) Blue Ribband Motors Corp. $ 1 . 2 4 $ 0 . 3 9 $ 2 0 . 1 0 7 . 5 4 % 1 5 % Bon Voyage Marine, Inc. $ 1 . 5 5 $ 0 . 4 7 $ 1 6...

Q:

Hamilton ink bonds have a 6% coupon rate but interest is paid semi annually and the bonds mature in eight years the par value is $1000 if your rate of return is 4% what is the value of the bond what...

Q:

Question 1 of 4 A $ 5 , 5 0 0 bond had a coupon rate of 4 . 2 5 % with interest paid semi - annually. Gabrielle purchased this bond when there were 8 years left to maturity and when the market...

Q:

QUESTION S ") "Since debt capital is cheaper than equity, companies should resort to one hundred percent use of debt to finance the investment" Discuss the limitations of the above financial policy...

Q:

need help! 42. 43. Zhen Yi Computers has an outstanding issue of bonds with a par value of $1,000, which have a 6 percent annual coupon rate, with interest being paid semi- annually. The bond has 4...

Q:

2 2. A S1000 bond with a coupon rate of 10%, interest paid semiannually, matures in eight years and sells for $1120. What is the yield to maturity? Show your inputs. 3. If a 7% coupon (semiannual)...

Q:

Noreen Leung has agreed to purchase her partners share in the business by making payments of $1100 every three months. The agreed transfer value is $16 500 and interest is 10% compounded annually. If...

Q:

Telecomp in Problem S1-9 estimates that the probabilities of the severity of events in each of the countries are as follows: Determine the best decision for Telecomp using expected value. In...

Q:

2.54 From past experience, a stockbroker believes that under the present economic conditions, a customer will invest in tax-free bonds with a probability of 0.6, will invest in mutual funds with a...

Q:

Quality planning, employee training in quality measurement, and cost of maintaining records of information and data related to quality are costs. external failure internal failure prevention...

Q:

=+1. Reinforce the benefits. Answer, Why buy? Show the consumer the reason to make the purchase. Clearly state what the consumer's going to get from the product/brand. For example: Tide To Go gets...

Q:

1 What is the state of your psychological contract with your organisation? Do you feel attached to the organisation? Do you know what the organisations goals are? Do your personal goals fit with...

Q:

2 What managerial practices impact (positively or negatively) on your psychological contract? Communication Training Appraisal Rewards Daytoday interaction and organisational life