3. you are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will pay a coupon of 4% annually. you
have an opportunity to buy the bonds at original issue (e.g., full 10-year life). assuming you require a 8% rate of return, how much should you pay for the bond (i.e., how much is it worth)?
Considering buying a municipal bond with a 10-year life, a 1,000 par value. $1,000 face value (FP) Coupon payment is: 5% coupon rate 5%1000 = $50 (C) Bond call price: $960 (CP) n = 10 years.
As we are aware, the calculation yields to Caller ID YTC = C+(FP-CP)/n (FP+CP)/2 50+(1000-960)/10 (1000 +960)/2 = 0.0548 = 5.48% Face amount is $1000. A 5% coupon rate $50 = coupon interest 10 years is the maturity year. Call cost is $1050. Face value after discount = $960 Call date is two years. The yield to call (YTC) is determined using the formula; YTC = (CP -FP/n (CP + FP)/2)+ (CP + FP) Where; coupon interest Call price is CP.Face Value (FP) (market value) n is the number of years. Adding a replacement to the formula, we have their own YTC = (50 + (1050 -960)/2) + (1050 +960)/2
The correct answer to this question is this one: "C. Finance Charge." <span>Collectively, the interest costs and other fees for using a credit card called the finance charge. IT has something to do with the charges after you used the credit cards.</span>