Clean and dirty bond prices You have decided to sell a 4 percent semiannual coupon bond two months after the last coupon payment. The bond is currently selling for $966.25. Answer the following questions about the bond. Assume that the par value of the bond is $1,000. Round your answer to nearest cent. What is the clean price of the bond? $ What is the dirty (full) price of the bond? $ Explain how the clean and dirty prices of the bond are relevant to the buyer of the bond.

Clean and dirty bond prices You have decided to sell a 4 percent semiannual coupon bond two months after the last coupon payment. The bond is currently selling for $966.25. Answer the following questions about the bond. Assume that the par value of the bond is $1,000. Round your answer to nearest cent. What is the clean price of the bond? $ What is the dirty (full) price of the bond? $ Explain how the clean and dirty prices of the bond are relevant to the buyer of the bond.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 10FPE

See similar textbooks

Similar questions

Your broker offers to sell for $1,060 a AAA-rated bond with a coupon rate of 5 percent and a maturity of seven years. Given that the interest rate on comparable debt is 4 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. Is your broker fairly pricing the bond? -Select- V so the bond-Select- v be purchased.
Your broker offers to sell for $1,071 a AAA-rated bond with a coupon rate of 6 percent and a maturity of nine years. Given that the interest rate on comparable debt is 5 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Is your broker fairly pricing the bond? , so the bond be purchased.
You want to determine the value of your company bond that you have held. The market has not traded your security in a long time but still makes payments semiannually 6.2% coupon and 7 years. You find two similar bonds with characteristics as follows. Bond X: 4-year 6% coupon priced at 950 Bond Y: 6-year 5% coupon priced at 980, 1000 bond value a. What is the approximate price of your bond? b. How does your bond compare to the other two bonds?
Lantech investor is deciding between two bonds: Bond A pay $72 annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a market value of $910. It has two years to maturity. Par value of the bonds is $1,000. A. What is the current yield on both bonds? B. Which bond should be chosen and why? C. A drawback of current yield is that is doesn't consider the total life of the bond. E.g. Yield to maturity on Bond A is 8.33 percent. What is the yield to maturity on Bond B? D. Is your answer changed from parts B and C based on which bond should be chosen?
You purchase a bond with an invoice price of $1,130. The bond has a coupon rate of 4.6 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000. Multiple Choice $1,094 67 $1.079.33 $1,133.33 $1,114.77
Exercise: Dirty/cleanPrice calculation A bond has face value of $1000. The bond’s yield to maturityis 6% andthe annual coupon rate is 8% with semiannual coupon payments.The maturity of the bond is 5years. The bond was issued on 1/1/2017, and one bought on 4/1/2018. Answer the following three questions: a.What is the dirty price of the bond? b.What is the accrual interest of the bond? c.What is its clean price?
You purchase a bond with a par value of $1,000 and an invoice price of $1,044. The bond has a coupon rate of 5.1 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Clean price _
You purchase a bond with an invoice price of $1,320. The bond has a coupon rate of 4.4 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000. Multiple Choice O о о O $1,270.67 $1,305.43 $1,312.67 $1,323.67 $1,285.33
You purchase a bond with an invoice price of $1,014. The bond has a coupon rate of 9 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond? Enter the answer with 2 decimals (e.g. 954.23).
Intro You purchase the following bond. The bond makes interest payments on April 10 and Oct. 10 of every year: 1 Purchase date 8/19/2021 2 Maturity date 10/10/2037 3 First call date 4/10/2029 4 Coupon rate 2.8% 5 Price 83.7 6 Face value 100 7 Payment frequency 8 Day count basis 30/360 9 Call price 134.18 What is the bond's yield to maturity using Excel's YIELD function? What is the bond's yield to call using Excel's YIELD function?
Bond Pricing. A six-year Circular File bond with face value$1,000pays interest once a year of$80and sells for$950. a. What is its coupon rate? b. What is its yield to maturity? c. If Circular wants to issue a new six-year bond at face value, what coupon rate must the bond offer?
Suppose that today’s date is April 15. A bond with a 10% coupon paid semiannually every January 15 and July 15 is quoted as selling at an ask price of 101.25. If you buy the bond from a dealer today, what price will you pay for it?