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Bonds and shares for opportunities

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1. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest is 8%. What is the most you would be willing to pay for this bond?

2. In January 2000, Harold bought 100 shares of Country Homes for $37.50 per share. He sold them in January 2010 for a total of $9,715.02. Calculate Harold's annual rate of return.

3. Samuel invested in gold U.S coins ten years ago, paying $216.53 for one-ounce gold coins. He could sell these coins for $734 today. What was his annual rate of return for this investment?

Please could you explain answers and what formulas you used...present value etc

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Solution Summary

The expert examines bonds and share for opportunities.

Solution provided by:
Sonia Agarwal, CA
Education
  • Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
  • Bachelor of Commerce, West Bengal University
Recent Feedback
  • "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect.  It looks like you've mistaken the Debt ratio for the Equity Multiplier.  You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already.  You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount.  Equity multiplier is not provided for us and we need to calculate it.  I really hope this is helpful to you.  "
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