Question 1: You have purchased a corporate bond with the settlement date on September 15 with the face value of $1000 and the coupon rate 9.84%, that has a listed price of 98.186 and that pays interest semiannually on February 15 and August 15. Accrued interest is determined using 30/360 convention. How much must you pay for the bond?
Question 2: Mark purchased a corporate bond with the settlement date on October 15 with the face value of $1000 and the coupon rate 11.82%, that has a listed price of 99.034 and that pays interest semiannually on February 15 and August 15. Accrued interest is determined using actual/actual convention. How much must Mark pay for the bond?
Question 3: Interest payments and bond prices are stated as percentages of par
- 1% or 1 point for a bond = $10.00
- An 1/8 of a point for a bond = $1.25
Mrs. Smith owns a 5% bond; this means that she receives $50 per year in interest. She paid a price of 113 ½ for the bond. How much is this in dollars?
Question 4: Rose wants to buy a second home that will eventually become her retirement home and does not want a mortgage to finance this second home. She plans to spend approximately $128,078 in 9 years on this purchase. She has two zero-coupon bonds that mature in 9 years each with cash values of $1,544.03 and face values of $2,500. In 9 years, she will use them as part of her $128,078. What is Rose's required monthly deposit at the beginning of each month in order to accumulate the $128,078 she needs to buy her home at an assumed interest rate of 13.77% on her investment?