Question
Selling bonds. Berkman Investment Bank has the following bond deals under way shown below. Determine the net proceeds of each bond and the cost of
Selling bonds. Berkman Investment Bank has the following bond deals under way shown below. Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the bank charges its commission. Assume all bonds are semiannual and issued at a par value of $1,000.
Company | Bond Yield | Commission | Coupon Rate | Maturity |
|
Rawlings | 6.9% | 1.7% of sale price | 0.0% | 20 years | |
Wilson | 7.8% | 3.4 % of sale price | 8.8% | 20 years | |
Louis Sluggers | 7.6% | 2.1 % of sale price | 9.3% | 10 years | |
Spalding | 7.9% | 4.3 % of sale price | 7.2% | 20 years | |
Champions | 8.1% | 3.3 % of sale price | 6.7% | 30 years |
For Rawlings, the market price of the bond is $ _________ (Round to the nearest cent.)
The net price of the bond is $ ________ (Round to the nearest cent.)
The yield to maturity of the bond is ________% (Round to four decimal places.)
For Wilson, the market price of the bond is $ __________ (Round to the nearest cent.)
The net price of the bond is $ __________ (Round to the nearest cent.)
The yield to maturity of the bond is ________% (Round to four decimal places.)
For Louis Sluggers, the market price of the bond is $ ________ (Round to the nearest cent.)
The net price of the bond is $ ________ (Round to the nearest cent.)
The yield to maturity of the bond is ________% (Round to four decimal places.)
For Spalding, the market price of the bond is $ ________ (Round to the nearest cent.)
The net price of the bond is $ ________ (Round to the nearest cent.)
The yield to maturity of the bond is ________% (Round to four decimal places.)
For Champions, the market price of the bond is $ _________ (Round to the nearest cent.)
The net price of the bond is $ ________ (Round to the nearest cent.)
The yield to maturity of the bond is _______% (Round to four decimal places.)
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