HW Bond Valuation and Bond Yields Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds: • Bond A has a 7% annual coupon‚ matures in 12 years‚ and has a $1000 face value. • Bond B has a 9% annual coupon‚ matures in 12 years‚ and has a $1000 face value. • Bond C has an 11% annual coupon‚ matures in 12 years‚ and has a $1000 face value. Each bond has a yield to maturity (YTM) of 9%
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HOMEWORK ASSIGNMENT 1. Callaghan Motors’ bonds have 10 years remaining to maturity. Interest is paid annually‚ they have a $1‚000 par value‚ the coupon interest rate is 8%‚ and the yield to maturity is 9%. What is the bond’s current market price? PV factor of sum = (1+i)^-n = (1+9%)^-10 =1.09^-10 = 0.4224 PV factor of annuity = 1 - (1+i)^-n / i = 1 - (1+9%)^-10 / 9% = 1 - 0.4224 / 9% = 0.5775 / 9% = 6.417 = PV factor of Sum * Par Value + PV factor of annuity * coupon payment = 0.4224 * 1‚000
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US Savings Bond A US savings bond is a security issued by the US treasury and began being issued during president Roosevelt’s presidency in 1935. A month after the president sign the legislation‚ the first savings bond was issued with a purchase price of 18.75‚ but a face value of $25. These first bonds were eventually nicknamed “the baby bonds”. When bonds first became big was during the US’s involvement with WWII in 1941. These bond were called the Series E Defense bonds and they went towards
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adventure began in the early fifties when Ian Lancaster Fleming created the story Casino Royale on his Jamaican property called Goldeneye.1 Fleming transformed popular detective and spy/espionage from the dark‚ through the eye of secret agent 007. James Bond films are about a lady’s man/spy that has dedicated his life to a British intelligence agency called MI6. By utilizing the most technologically advanced spy equipment and specially designed vehicles that can withstand the most torturous conditions
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main advantages and disadvantages of CAT bonds compared to (re)insurance from the perspective of the party seeking protection. The first main advantage of CAT bond compared to reinsurance‚ in terms of the party seeking protection‚ the Sponsor‚Munich Re in our case‚ is that CAT bond ‚which is Queen Street II Captial Ltd in our case ‚allows the Munich Re to transfer the catastrophe risks (North Atlantic U.S.hurricane and European windstorms) to the CAT bond investors via SPRV‚ Queen Street II Capital
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CHEMICAL BONDS Chemical Bonds I. Introduction Chemical compounds are formed by the joining of two or more atoms. A stable compound occurs when the total energy of the combination has lower energy than the separated atoms. The bound state implies a net attractive force between the atoms called a chemical bond. The two extreme cases of chemical bonds are the covalent bonds and ionic bonds. Covalent bonds are bonds in which one or more pairs of electrons are shared by two atoms. Covalent bonds‚ in
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A Broken Bond From the moment that the mother feels her child kicking‚ there is a very strong bond developed. In one’s life‚ a strong maternal bond is crucial. In Laura Esquivel’s novel Like Water for Chocolate‚ it seemed liked Mama Elena was unaware of the importance of this relationship. “Unquestionably‚ when it came to dividing‚ dismantling‚ dismembering‚ desolating‚ detaching‚ dispossessing‚ destroying‚ or dominating‚ Mama Elena was a pro.” Mama Elena was destined to ruin Tita’s life.
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When a metallic substance shares electrons with a non-metal substance it forms covalent bonds‚ which make molecules. The metal becomes positively charged atoms‚ which means that the number of electrons is never less than the number of protons. Non-metals become negatively charged atoms‚ and now the number of electrons is more than the number of protons. When atoms share electrons of nonmetals then a covalent bond is formed inside the molecule. Monatomic elements are elements that only contain one type
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Week 3 Time Value of Money and Valuing Bonds Chapter 6 55. Amortization with Equal Payments Prepare an amortization schedule for a five-year loan of $36‚000. The interest rate is 9 percent per year‚ and the loan calls for equal annual payments. How much interest is paid in the third year? Answer: $2‚108.52 56. Amortization with Equal Principal Payments Rework Problem 55 assuming that the loan agreement calls for a principal reduction of $7‚200 every year instead of equal annual payments. Answer:
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Bond Case Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company’s pension fund management division. An important new client‚ The North-Western Municipal Alliance‚ has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities‚ and Strother and Tibbs‚ who will make the actual presentation‚ have asked you to help them by answering the following questions. What are the key features of a
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