b. Determine the yield to maturity on your bond investment.--------------------------------------------------------------------------------------- BUSN 380 Week 4 Quiz Set 1 FOR MORE CLASSES VISIT
The value of my bond increased because people would want to buy my bond at $ 1000 because the same bond at 8 % would cost more. My bond had a fixed interest rate of 9.5 percent during a time period when interest rates in the economy were declining.
5. Using Margin. Bill Campbell invested $ 4,000 and borrowed $ 4,000 to purchase shares in Wal-Mart. At the time of investment, Wal-Mart was selling for $ 45 a share.
a. If Bill paid $ 30 commission, how many shares could Bill buy if he used only his own money and did not use margin?
b. If Bill paid $ 50 commission, how many shares could Bill buy if he used his $ 4,000 and borrowed $ 4,000 on margin to buy Wal-Mart stock?
b. Assuming that Bill did use margin, paid $ 90 commission to sell his stock, and sold his Wal-Mart stock for $ 53, how much profit did he make on his Wal-Mart investment?
6. Calculating yields. Assume you purchased a corporate bond at its current market price of $ 850 on January 2, 2002. It pays 9 percent interest and it will mature on December 31, 2011, at which time the corporation will pay you the face value of $ 1,000. a. Determine the current yield on your bond investment at the time of purchase.
b. Determine the yield to maturity on your bond investment.--------------------------------------------------------------------------------------- BUSN 380 Week 4 Quiz Set 1 FOR MORE CLASSES VISIT