Finding the selling price of bond

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A. Suppose you have $20,000 in a bank account earning 0.5% interest per month. You need $30,000 to make a down payment on a house you want to purchase. You can save an additional $100 per month. How long will it take to accumulate the $30,000?

B. Suppose you put aside $3,000 each year in a savings plan that earns 8% per year. In 5 years, you will receive a gift of $10,000 that also can be invested. Based on this plan, how much will you have accumulated 30 years from now?

C. A 30-year 4% coupon bond with a face value of $1000 is currently selling for $880. Compute your rate of return if you sell the bond next year for $928.

D. You have paid $970 for a 5% coupon bond with a face value of $1,000 that matures in five years. You plan on holding on the bond for one year. If you want to earn 9% rate of return on this investment, what price must you sell the bond for? Is it realistic?

Reference no: EM132635031

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