Yield to maturity amortization method

    • [DOCX File]qlynn.ba.ttu.edu

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      The bonds provide bondholders with an 8% yield and mature in 10 years. Interest is paid on July 1st and December 31st of each year. The bonds are classified as . Held-to-Maturity. and will be reported using the effective interest method. Prepare an amortization table for the 1st and 2nd year of the bond. Cash Rec’d. Interest Rev. Prem. Amort ...

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    • [DOC File]godgiften.weebly.com

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      5. The interest rate written in the terms of the bond indenture is called the effective yield or market rate. 6. The stated rate is the same as the coupon rate. 7. Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense. 8. A bond may only be issued on an interest payment date. 9.

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    • [DOC File]1._Some of the factors to be considered in determining ...

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      It was therefore designated by the APB as the preferred method of amortization. The straight-line method may be used if the interim results of using it do not differ materially from the resulting amortization using the effective-interest method. The total amortization will, of course, be the same under either method over the life of the bond. 12.

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    • [DOC File]Chapter 10

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      Therefore, its yield to maturity is 6.8245%. Using the constant yield method, we can compute that its price in one year (when maturity falls to 9 years) will be (at an unchanged yield) $814.60, representing an increase of $14.60. Total taxable income is: $40 + $14.60 = $54.60. The yield to maturity of the par bond equals its coupon rate, 8.75%.

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    • [DOC File]CHAPTER 13

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      Held-to-maturity securities generally should be classified as current or noncurrent, based on the maturity date of the individual securities. ... Schedule of Interest Revenue and Bond Discount Amortization. Straight-line Method. ... Effective-Interest Method. 9% Bond Purchased to Yield 12%.

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    • [DOC File]P14-3 Premium Amortization Schedule with Retirement …

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      Jun 12, 2010 · P14-3 Premium Amortization Schedule with Retirement Before Maturity The Dorset Corporation issued $600,000 of 13% bonds on January 1, 2009 for $614, 752.24. They are due December 31, 2011,were issued to yield 12%, and pay interest semiannually on June 30 and December 31. The company uses the effective interest method. 1.

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    • [DOC File]Answers to Text Discussion Questions

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      The normal amortization of the premium over the life of the bond has less of a negative effect on yield. c) No. The threat of the call will likely keep the price closer to $1,080 (though with four years to call, a littler higher value than $1,080 may be possible if the yield on the bond is well above market rates).

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    • [DOC File]Practice Problem 2

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      Moore Corporation uses the straight-line method of amortization. The amount of cash received on January 1, 2000, is: a. $150,000. b. $147,000. c. $147,058. d. $153,000. 27. Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1. Moore Corporation uses the straight-line ...

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    • [DOC File]1 - Purdue University

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      A 10-year bond pays annual coupons. The bond has a maturity value of 20,000. The bond is purchased to yield 8% annually for a price of 18,322.48. Calculate the interest in the 6th coupon. 1507.54 1520.15 1533.76 1548.46 1564.33 You are given the following yield curve: Length of Investment Spot Rate 1 7.00% 2 7.75% 3 8.25% 4 8.40% 5 8.50%

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    • [DOC File]Solutions to Chapter 1 - San Francisco State University

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      Solutions to Chapter 6. Valuing Bonds . 1. a. Coupon rate = 6%, which remains unchanged. The coupon payments are fixed at $60 per year. b. When the market yield increases, the bond price will fall. The cash flows are discounted at a higher rate. c. At a lower price, the bond’s yield to maturity will be higher.

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