The Mathematics of Money

262 Chapter 6 Investments The stock of Big L Corporation sold for $15.35 per share 2 years ago. Today, it sells for $0.14 per s ...

Copyright © 2008, The McGraw-Hill Companies, Inc. 6.2 Bonds Back in Chapter 1, we discussed promissory notes. Recall that a prom ...

264 Chapter 6 Investments Example 6.2.1 On May 25, 2007, Zarofi re Systems issued a $1,000 par value bond with an 8% coupon rate ...

Copyright © 2008, The McGraw-Hill Companies, Inc. To be able to read this table, you need to be aware of certain assumptions. Th ...

266 Chapter 6 Investments It may not be entirely clear how to interpret the entries in this table. What we are doing is imaginin ...

Copyright © 2008, The McGraw-Hill Companies, Inc. The highest credit rating belongs to the U.S. federal government, since there ...

268 Chapter 6 Investments When a bond is sold, the buyer usually compensates the seller for the interest that was earned but not ...

Bonds and Sinking Funds When a company issues bonds, it takes on the obligation to make the promised pay- ments. The ongoing int ...

270 Chapter 6 Investments A government bond with 12 years to maturity carries a coupon rate of 6%. Similar government bonds wit ...

Copyright © 2008, The McGraw-Hill Companies, Inc. a. What is the selling price for one of these bonds for the rates shown in the ...

272 Chapter 6 Investments Sybil owns several U.S. Treasury Bonds (bonds issued by the U.S. federal government). On the radio sh ...

Copyright © 2008, The McGraw-Hill Companies, Inc. A $10,000 par value zero coupon bond with 8 years to maturity sells for $5,63 ...

274 Chapter 6 Investments a. How much would one of these bonds cost? b. If you bought one of these bonds, what payments would yo ...

Copyright © 2008, The McGraw-Hill Companies, Inc. among speculators. Commodities speculators are individuals or financial instit ...

276 Chapter 6 Investments privilege of being protected from having to sell at an unattractively low market price. The overall ad ...

Copyright © 2008, The McGraw-Hill Companies, Inc. exchange. Likewise, an electric utility looking to purchase coal can do so at ...

278 Chapter 6 Investments Luis has purchased the right to sell 5,000 bushels for 612.5 cents per bushel, which we can work with ...

Copyright © 2008, The McGraw-Hill Companies, Inc. In theory, Jimmy has two contracts running, but no actual financial stake in t ...

280 Chapter 6 Investments (a) $6,740/$3,754.50
1.7952
179.52%. Since this is a loss, it should be expressed with a negativ ...

Copyright © 2008, The McGraw-Hill Companies, Inc. (a) If the stock price rises to $75, you can exercise your option to buy 100 s ...