Question: You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 8 percent Term to maturity: 14 years
You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 8 percent Term to maturity: 14 years Sinking fund: 4 percent of outstanding bonds retired annually; the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 13 percent after five years have passed, what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if any, as a negative value. Round your answer to the nearest dollar. b. If you hold the bond 14 years, what do you receive at maturity? Principal c. What is the bond's current yield as of right now? Round your answer to the - nearest whole number. % d. Given your price in a, what is the yield at maturity? Round your answer to the nearest whole number. e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number X % Problem 13-10 You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 8 percent Term to maturity: 14 years Sinking fund: 4 percent of outstanding bonds retired annually; the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 13 percent after five years have passed, what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if any, as a negative value. Round your answer to the nearest dollar. b. If you hold the bond 14 years, what do you receive at maturity? Principal C. What is the bond's current yield as of right now? Round your answer to the nearest whole number. d. Given your price in a, what is the yield at maturity? Round your answer to the nearest whole number. 0 e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number
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