Deck 22: Corporate and Government Bonds

Question 1

Compute the dollar amount of interest that will be earned per year for a bond listed as Raz 9 ¼s12.

Answer 1

$92.50

Question 2

Compute the dollar amount of interest that will be earned per year for three bonds listed as Hertz 8.4s15 and two bonds listed as Cmz 9s18.

Answer 2

$432

Question 3

If a company issued a callable bond at 6% interest, would it be likely to call the bond if the current rate of interest rose to 7%?

Answer 3

No

Question 4

What would be the "stock" value of a bond that was convertible to 40 shares of stock if the stock was priced at 19.70?

Question 5

Allen Baker purchased ten $500 convertible bonds at face value. Each bond was convertible into 20 shares of common stock. After several years, when the stock was selling at 40, Allen converted all ten bonds. What was Allen's gain upon conversion of the bonds?

Question 6

Is a bond quoted at 90 selling at a premium or a discount?

Question 7

Compute the premium price at which a $1,000 bond quoted at 106 ½ would sell.

Question 8

Compute the dollar amount of interest that will be earned per year for a bond listed as Marr8 ⅜s17 and a bond listed as Pudt 8-⅞s09.

Question 9

Allison Yu purchased five $1,000 convertible bonds at face value. Each bond was convertible into 25 shares of common stock. After several years, when the stock was selling at 46, Allison converted all five bonds. What was Allison's gain upon conversion of the bonds?​

Question 10

Compute the dollar amount of interest that will be earned per year for three bonds listed as ATT 10s18 and two bonds listed as IBM 9 ¼s20.

Question 11

Sandia Corporation issued $2,000,000 worth of callable bonds paying 7% interest. The maturity date for the bonds was in 10 years. A year later, interest rates fell to 5%. The bonds were called and new bonds were sold at the 5% rate. How much did Sandia Corporation save by calling the bonds?​

Question 12

Compute the dollar amount of interest that will be earned per year for a bond listed as RKB 8 ¾s15.

Question 13

A $1,000 bond, with interest at 9 ½% on March 1 and September 1, was purchased on November 23. Compute the number of days for which accrued interest will be paid.

Question 14

A $1,000 bond, with interest at 6 ⅞% on January 1 and July 1, was purchased on October 7. Compute the number of days for which accrued interest will be paid.

Question 15

Is a bond quoted at 105 selling at a premium or a discount?

Question 16

Erik Wells bought a Sandia Corporation convertible bond for $1,000. The bond was convertible to 50 shares of stock. At the time of the purchase, the stock was selling for $20 per share. At the end of two years, the stock was selling for $28 per share. Erik converted his bond. Assuming the market value of the bond had not changed, how much profit did Erik realize by converting?

Question 17

Compute the dollar amount of interest that will be earned per year for four bonds listed as Kvr 7 ¾s12 and one bond listed as LMC 8s17.

Question 18

Compute the discounted price at which a $1,000 bond quoted at 87 ¼ would sell.

Question 19

​What would be the "stock" value of a bond that was convertible to 50 shares of stock if the stock was priced at 27.32?

Question 20

Compute the premium price at which a $1,000 bond quoted at 117 ¼ would sell.

Question 21

A $1,000 bond, with interest at 9% on March 1 and September 1, was purchased on November 4 at 107 plus accrued interest. Compute the entire purchase cost of the bond. (Assume a 360-day year and a commission of $5 per bond.)

Question 22

On June 20, Betty Carper purchased eight JVT 7.2s09 bonds that pay interest semiannually on April 1 and October 1. Calculate the accrued interest Betty paid to the seller. (Assume a 360-day year.)​

Question 23

A $1,000 bond, with interest at 10% on March 1 and September 1, was purchased on February 13. Compute the dollar amount of accrued interest that will be paid to the seller. (Assume a 360-day year.)

Question 24

A $1,000 bond, with interest at 8% on March 1 and September 1, was sold on July 8 at 92 plus accrued interest. Compute the dollar amount of the sale the seller received. (Assume a 360-day year and a commission of $5 per bond.)

Question 25

A $1,000 bond, with interest at 9% on January 1 and July 1, was purchased on September 12 at 86 plus accrued interest. Compute the entire purchase cost of the bond. (Assume a 360-day year and a commission of $5 per bond.)

Question 26

A $1,000 bond, with interest at 9 % on March 1 and September 1, was sold on July 7 at 106 plus accrued interest. Compute the dollar amount of the sale the seller received. (Assume a 360-day year and a commission of $5 per bond.)

Question 27

A $1,000 bond, with interest at 8% on March 1 and September 1, was purchased on October 17. Compute the dollar amount of accrued interest that will be paid to the seller. (Assume a 360-day year.)

Question 28

​A $1,000 bond, with interest at 8 ½% on March 1 and September 1, was purchased on June 18 at 108 plus accrued interest. Compute the entire purchase cost of the bond. (Assume a 360-day year and a commission of $5 per bond.)

Question 29

A $1,000 bond, with interest at 9% on March 1 and September 1, was sold on October 30 at 105 plus accrued interest. Compute the dollar amount of the sale the seller received. (Assume a 360-day year and a commission of $5 per bond.)​

Question 30

A $1,000 bond, with interest at 9 ¼% on January 1 and July 1, was purchased on September 10. Compute the dollar amount of accrued interest that will be paid to the seller. (Assume a 360-day year.)

Question 31

A $1,000 bond, with interest at 7% on January 1 and July 1, was purchased on May 11. Compute the dollar amount of accrued interest that will be paid to the seller. (Assume a 360-day year)

Question 32

Two $1,000 bonds, with interest at 8% on March 1 and September 1, were purchased on October 8 at 104 plus accrued interest. Compute the entire purchase cost of the bonds. (Assume a 360-day year and a commission of $5 per bond.)

Question 33

Five $1,000 bonds that pay interest at 9% semiannually on April 1 and October 1 were purchased July 10 at 92. Calculate the total amount paid for the bonds. (Assume a 360-day year and a commission of $5 per bond.)

Question 34

A $1,000 bond, with interest at 8 ½% on January 1 and July 1, was sold on September 4 at 103 plus accrued interest. Compute the dollar amount of the sale the seller received. (Assume a 360-day year and a commission of $5 per bond.)

Question 35

A $1,000 bond, with interest at 9 ⅛ % on March 1 and September 1, was purchased on October 15. Compute the number of days for which accrued interest will be paid.

Question 36

A $1,000 bond, with interest at 8.2% paid semiannually January 1 and July 1, was purchased on August 18. Compute the number of days for which accrued interest will be paid.

Question 37

On November 15, Melvin Weldon purchased five KTV 8s12 bonds that pay interest semiannually on April 1 and October 1. Calculate the accrued interest Melvin paid to the seller. (Assume a 360-day year.)​

Question 38

A $1,000 bond, with interest at 10.4% paid semiannually April 1 and October 1, was purchased on November 20. Compute the number of days for which accrued interest will be paid.

Question 39

A $1,000 bond, with interest at 9% on January 1 and July 1, was sold on March 20 at 109 plus accrued interest. Compute the dollar amount of the sale the seller received. (Assume a 360-day year and a commission of $5 per bond.)

Question 40

A $1,000 bond, with interest at 8 ½% on January 1 and July 1, was purchased on September 30 at 97 plus accrued interest. Compute the entire purchase cost of the bond. (Assume a 360-day year and a commission of $5 per bond.)

Question 41

An investor bought two bonds-bond A was a 9% bond at 106 and bond B was a 7% bond at 94. The commission was $5 per bond. Compute how much greater the current yield from bond A is than from bond B. (Round yields to two decimal places.)

Question 42

An investor bought a 10 ½% bond at 109. The bond would mature in 5 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 43

An investor bought an 8 ½% bond at 98. The bond would mature in 4 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 44

An investor bought two bonds. bond A was an 8% bond at 102 and bond B was an 8½% bond at 104. The commission was $5 per bond. Compute how much greater the current yield from bond B is than from bond A. (Round yields to two decimal places.)

Question 45

An investor bought a 6 ½% bond at 85. The bond would mature in 5 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 46

An investor bought an 8% bond at 110. The commission was $5. Compute the annual current yield. (Round answer to two decimal places.)

Question 47

An investor bought an 8 ½% bond at 108. The bond would mature in 8 years. Compute the rate of yield to maturity. (Round answer to two decimal places.)

Question 48

An investor bought an 8% bond at 92. Compute the current yield. (Round answer to two decimal places.)

Question 49

An investor bought a 6 ¾% bond at 74. The bond would mature in 13 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 50

An investor bought an 8% bond at 106. The bond would mature in 5 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 51

An investor bought a 6 ¾% bond at 74. The commission was $5. Compute the current yield. (Round answer to two decimal places.)

Question 52

An investor bought a 10 ½% bond at 109. The commission was $5. Compute the current yield. (Round answer to two decimal places.)

Question 53

An investor bought two bonds-bond A was a 9% bond at 106 and bond B was a 7% bond at 94. Each bond is to mature in 5 years. Compute how much greater the yield to maturity from bond B is than from bond A. (Do not consider commission. Round yields to two decimal places.)

Question 54

An investor bought two bonds-bond A was an 8% bond at 110 and bond B was a 6% bond at 98. The commission was $5 per bond. Compute how much greater the current yield from bond A is than from bond B. (Round yields to two decimal places.)

Question 55

An investor bought two bonds. bond A was an 8% bond at 102 and bond B was an 8 ½% bond at 104. Each bond is to mature in 4 years. Compute how much greater the yield to maturity from bond A is than from bond B. (Do not consider commission. Round yields to two decimal places.)

Question 56

An investor bought a 5 ½% bond at 99. Compute the current yield. (Round answer to two decimal places.)

Question 57

An investor bought an 8% bond at 110. The bond would mature in 8 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 58

An investor bought a 7% bond at 82. The bond would mature in 6 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)

Question 59

An investor bought a 9% bond at 88. Compute the current yield. (Round answer to two decimal places.)

Question 60

An investor bought an 8 ½% bond at 108. Compute the current yield. (Round answer to two decimal places.)

Question 61

An investor purchased a 7% bond at 90 (no commission). The bond matures in 10 years. Calculate the rate of yield to maturity. (Round answer to two decimal places.)

Question 62

An investor purchased an 8 ½% bond at 108. The bond matures in 5 years. Calculate the current yield. (Round answer to two decimal places.)

Question 63

An investor purchased a 6.4% bond at 92. The bond matures in 8 years. Calculate the current yield. (Round answer to two decimal places.)

Question 64

An investor purchased a 10 ½% bond at 110. The bond matures in 7 years. Calculate the current yield. (Round answer to two decimal places.)

Question 65

An investor bought a 9% bond at 88. The bond would mature in 6 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)