Homework Answers
I have explained the concept. Some numbers were not clearly visible but i have tried to solve it.
| Face Value of bond | Quoted price | Cost of bond | Interest Rate | Annual Interest | Annual Yield | Cost of bond= (quoted price/100*Face value) | |
| 10000 | 98 | 9800 | 8% | 800 | 8.16% | When we say the face value is 1000 and investor pays quoted price of 90 it means investors pays 0.90*1000=900 | |
| 12000 | 77 | 9240 | 7.50% | 900 | 9.74% | ||
| 5000 | 85.2 | 4260 | 8.25% | 412.5 | 9.68% | ||
| 20000 | 91.6 | 18320 | 10.50% | 2100 | 11.46% | ||
| 40000 | 85.25 | 34100 | 12% | 4800 | 14.08% | ||
| Question 6 | |||||||
| Face Value of bond | Quoted price | Cost of bond | Interest Rate | Annual Interest | Annual Yield | ||
| 9500 | 88.25 | 8383.75 | 6% | 570 | 6.80% | 88.25/100*9500=Bond cost | |
| Question 7 | |||||||
| Face Value of bond | Quoted price | Cost of bond | Interest Rate | Annual Interest | Annual Yield | ||
| 14000 | 96.75 | 13545 | 12.63% | 1767.5 | 13.05% | 96.75/100*14000=Bond cost | |
| Question 8 | |||||||
| Face Value of bond | Quoted price | Cost of bond | Interest Rate | Annual Interest | Annual Yield | ||
| 1500 | 83.75 | 1256.25 | 8.75% | 131.25 | 10.45% |
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