FI 311 Connect homework #6

FI 311 Connect homework #6 - CONNECT 6 1) Oil Well Supply...

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1) Oil Well Supply offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price per bond if the face value is $1,000? $1016.95 $1401.26 $953.28 $953.88 $1401.86 Enter 9 × 2 7.73/2 70/2 1,000 N I/Y PV PMT FV Solve for –953.28 2) A bond that pays interest annually yielded 7.75 percent last year. The inflation rate for the same period was 5.80 percent. What was the real return on this bond? Format to 4 decimal places. 5.88 percent 1.84 percent 5.80 percent 1.95 percent 2.01 percent 3) A zero coupon bond with a face value of $1,000 is issued with an initial price of $475.00. The bond matures in 25 years. What is the implicit interest, in dollars, for the first year of the bond's life? Assume semi-annual compounding and format to 6 decimal places. Your answer may be slightly different that the one shown if using the amortization worksheet. . $30.57 $12.28 $9.00 $21.00 $14.36 Implicit interest = $489.36 − $475 = $14.36 4) An indenture is: the legal agreement between the bond issuer and the bondholders. a bond that is secured by the inventory held by the bond's issuer. the written record of all the holders of a bond issue. another name for a bond's coupon.
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This note was uploaded on 11/16/2011 for the course FI 311 taught by Professor Booth during the Fall '06 term at Michigan State University.

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FI 311 Connect homework #6 - CONNECT 6 1) Oil Well Supply...

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