Problem 6.19 – Bond Bill and Bond Ted
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition
Calculate the percentage change in the price for both bonds given a change in interest rates.
Calculate the percentage change in the price for both bonds given a change in interest rates.
What is the APR and EAR for Big Dom’s Pawn Shop if it charges an interest rate per month on its loans to customers?
What is the impact on the price of Bond J and Bond K if interest rates suddenly change by 2 percent? Find the percentage price change for both bonds.
What are the monthly payments and the effective annual rate for a 48-month loan to buy a sports coupe priced at $90,500, given an APR of 7.2%? (Your numbers will vary). Find your monthly payments and the effective annual rate on the loan.
What is the number of periods required to pay off an overdue account balance if a customer agrees to a fixed repayment schedule per month and interest is charged on the overdue balance at a fixed rate per month?
What is the current yield, YTM, and the effective annual yield on 6.4 percent coupon bonds with 18 years to maturity, making semiannual payments, and currently selling for 106.32 percent of par? Your numbers will vary. Calculate the current yield, yield to maturity, and the effective annual yield on the bonds.
What is the effective annual return earned by Friendly’s Quick Loans, Inc. on their lending business that offers a loan? Additionally, what would be the APR claimed by Friendly’s? Calculate the effective annual return and the annual percentage rate.
The firm wants to issue new bonds for much-needed expansion projects. Determine the coupon rate that the firm should set on its new bonds to sell them at par.
What is the clean price of a bond with an invoice price and a par value, a coupon rate, and a certain number of months to the next coupon date? What is the clean price of the bond?
What are the monthly return, APR, and effective annual return for a perpetuity contract offered by Live Forever Life Insurance Co. that pays a monthly amount?