Ch 14 Practice problems with solution

Ch 14 Practice problems with solution - Ch 14 Practice...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Ch 14 Practice problems with solution 1. If you are buying a coupon bond between interest paying dates, is the amount you would pay to your broker for the bond more or less than the amount quoted in the financial quotation pages? Discuss the differences and how these differences arise. If you are buying a bond between interest paying dates, you will pay more than the amount quoted in the financial pages. You will pay that price plus the interest that has accrued since the last interest paying date. That interest belongs to the seller of the bond and will be remitted to the seller by the broker. When the next interest paying date arrives, you will receive the entire coupon payment. Feedback: The rationale for this question is be certain that the student understands the mechanism involved in the payment of interest on coupon bonds and the pricing of bonds. 2. Discuss the taxation ramifications of zero coupon bonds. How has this taxation procedure changed over the years? How has this change affected the demand for these bonds?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/26/2009 for the course FBE 441 taught by Professor Callahan during the Fall '07 term at USC.

Page1 / 2

Ch 14 Practice problems with solution - Ch 14 Practice...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online