ACCT316 Study Guide - Midterm Guide: Amortization Schedule, Dividend, Accrued Interest
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Bond Valuation and Yield | ||||||||||||||||||
A bond has a par value of $1,000, pays $50 semiannually and hasa maturity of 10 years. | ||||||||||||||||||
If the bond earns 12% per year, what is the price of thebond? | ||||||||||||||||||
Rate | ||||||||||||||||||
Nper | ||||||||||||||||||
PMT | ||||||||||||||||||
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What is the yield to maturity for the bond? | ||||||||||||||||||
Nper | ||||||||||||||||||
PMT | ||||||||||||||||||
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What would be the bond's price if the rate earned declined to 8%per year? | ||||||||||||||||||
Rate | ||||||||||||||||||
Nper | ||||||||||||||||||
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If the maturity period is reduced to 5 years and the requiredrate of return is 8% what would be the | ||||||||||||||||||
Price of the bond? | ||||||||||||||||||
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Nper | ||||||||||||||||||
PMT | ||||||||||||||||||
FV | ||||||||||||||||||
Type | ||||||||||||||||||
PV | ||||||||||||||||||
What is the yield to maturity for the bond when the maturity is5 years and the required rate of | ||||||||||||||||||
Return is 8%? | ||||||||||||||||||
Nper | ||||||||||||||||||
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PV | ||||||||||||||||||
FV | ||||||||||||||||||
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Rate | ||||||||||||||||||
What generalizations about bond prices, interest rates andmaturity periods can be made | ||||||||||||||||||
Based on the calculation made above? | ||||||||||||||||||
Callable Bonds | ||||||||||||||||||
The following bonds have a par value of $1,000 and the requiredrate of return is 10%. | ||||||||||||||||||
Bond XY: 5 |
A company issued 8%, 10-year bonds with a face amount of $100million. The market yield for bonds of similar risk and maturity is6%. Interest is paid semiannually. At what price did the bondssell? (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVADof $1) (Use appropriate factor(s) from the tablesprovided
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Universal Foods issued 12% bonds, dated January 1, with a faceamount of $225 million on January 1, 2016. The bonds mature onDecember 31, 2025 (10 years). The market rate of interest forsimilar issues was 14%. Interest is paid semiannually on June 30and December 31. Universal uses the straight-line method. (FV of$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.) |
Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. | Determine the price of the bonds at January 1, 2016.(Enter your answer in whole dollars.) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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5. | What is the amount(s) related to the bonds that Patey willreport in its balance sheet at December 31, 2016? ////////////
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